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Law of Insurance Contracts

Chapter 20 WARRANTIES 20-1 TERMINOLOGY: THE NATURE OF WARRANTIES A warranty, said Lord Mansfield, is “a condition on which the contract is founded”. 1 The role of the warranty is “to establish the existence of circumstances without which the insurer does not undertake to be bound”. 2 More specifically, a policy term of this kind classically understood from its language acts as a promise that the specified matter is so or will continue to be so; it performs a role not dissimilar to a guarantee 3 . Insofar as such terms speak to the future they are usually called promissory or continuing warranties, 4 whereas warranties that certain statements of fact are accurate are sometimes called affirmative warranties. For lawyers today, however, perhaps the most useful introductory definition of a warranty is that of Lord Goff: a warranty is any term of an insurance contract which, properly construed, is a condition precedent to the inception or continuation of cover. 5 In other kinds of contract “warranties” are usually something different.

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