Although there is no specific legal requirement to pass Air Law before first solo, there is often a club rule in the Flying Orders Book to this effect. It may also state that the student should pass Met, Nav and HPL before first solo cross-country. I would tend to agree that this is desirable and it was set out in CAA Guidance to Examiners some time back.
If there is such a rule in your club or school's Flying Orders book and it is not adhered to and the student had an accident, it could cause problems with the insurance. The instructor would be the likely target as it is his responsibility to ensure that his student complies.