In 1879 an important measure was passed by the Parliament of the Cape Colony. Act 8 provided inter alia:

These provisions have caused anomalies and problems which have become acute. Commerce and industry have increased spectacularly since the world war and relatively more commercial cases are being brought before our Courts. First, the 1879 Act (and therefore English insurance law) also applies in the Orange Free State, South-West Africa and Rnodesia,1 but not in the Transvaal or Natal. The latter two provinces follow the Roman-Dutch common law, though in practice British and American decisions are of high persuasive authority.

Second, the Act is silent on English statutes passed before 1879. No definitive judgment has yet been given as to whether such statutes have force in the Cape Province (and the other three territories), and academic opinion is divided on the matter.

Third, the words “having reference to questions of fire, life and marine insurance” are ambiguous. Do they envisage only such questions as relate to the legal incidents of policies and the construction of terms, or do they apply widely to every legal question that may arise in the course of an action upon a policy of insurance? Our Courts have, not altogether consistently, adopted the former approach. They have applied English law to the following matters which they regarded as “peculiar to insurance”: warranties, insurable interest, subrogation, and the concept of good faith; and have applied South African common law on the following matters which they considered “part of the ordinary law of contract”: the rules of cession, the interpretation of written contracts, the law of trusts, and the principles relating to stipulations for the benefit of third parties.2