Lloyd's Maritime and Commercial Law Quarterly
Insurance warranties: the absolute end?
Malcolm Clarke*
The English concept of insurance warranty was once described as “a prodigal aberration” from generally understood European principles of fairness.
1
In July 2007 the Law Commissions (LCs) published a Consultation Paper (CP),
2
a large part of which deals with reform of the law of warranties, together with the associated subject of pre-contractual information duties, notably misrepresentation and disclosure. This paper reflects on the problems perceived by the Commissions in current law and gives critical consideration to the proposals provisionally set out by them for the law relating to insurance warranties
.
1. Warranties defined
Lord Mansfield once described a warranty as “a condition on which the contract is founded”,3
to “establish the existence of circumstances without which the insurer does not undertake to be bound”.4
More specifically, a warranty is said to be a term of the contract of insurance, in which the insured “warrants, owing to force of express words or through the operation of law, either that certain statements of fact are accurate, or that certain
* Professor of Commercial Law, University of Cambridge.
The following abbreviations are used:
Basedow & Fock: J Basedow and T Fock, Europäisches Versicherungsvertragrecht
(Tübingen, 2002), vol 1;
Clarke, LIC
: MA Clarke, The Law of Insurance Contracts
, 5th edn (London, 2006);
CP: Law Commission and Scottish Law Commission, Insurance Contract Law: Misrepresentation, Non-Disclosure and Breach of Warranty by the Insured
: LCCP No. 182; SLC DP No. 134 (2007);
ICOB: Insurance Conduct of Business Rules;
IP2: Law Commission and Scottish Law Commission, Insurance Contract Law: Issues Paper 2: Warranties
(2006);
LCs: Law Commission for England and Wales and the Scottish Law Commission; MIA 1906: Marine Insurance Act 1906;
Park
: Sir J Park, A System of the Law of Marine Insurance
, 5th edn (1802).
1. John Hare, “The Omnipotent Warranty: England v. The World,” a paper presented to the International Marine Insurance Conference, held in Brussels in November 1999, in M Huybrechts et al
(eds), Marine Insurance at the Turn of the Millennium
, vol 2 (2000) 37; see
http://web.uct.ac.za/depts/shiplaw/imic99.htm
.
2. Law Commission and Scottish Law Commission, Insurance Contract Law: Misrepresentation, Non-Disclosure and Breach of Warranty by the Insured
(LCCP No. 182, SLCDP No. 134 (2007). Generally see J Birds and NJ Hird, Birds’ Modern Insurance Law
, 6th edn (London, 2004), ch 7; Clarke, LIC
, ch 20; and N Legh-Jones (ed), MacGillivray on Insurance Law
, 10th edn (London, 2003), ch 10.
3. Bean
v. Stupart
(1778) 1 Doug 11, 14. The liability of the insurer “depends” on compliance with certain obligations: B Soyer, Warranties in Marine Insurance
, 2nd edn (London, 2006), [1.6]. Ibid
, the Germanic legal systems (der deutscher Rechtskreis: Austria, Germany, Liechtenstein and Switzerland), in which warranties are mere duties (blossen Obiegenheiten), as distinguished from enforceable policyholder promises (Vertragsp-flichten) such as a promise to pay premium: Basedow & Fock, 78–84.
4. FD Rose, Marine Insurance Law and Practice
(London, 2004), [9.20].
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