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From ‘Buyer beware’ to ‘Seller be fair’: A long and winding road, with a twist of lemon An insurer’s obligation of pre- contractual disclosure.

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Presentation on theme: "From ‘Buyer beware’ to ‘Seller be fair’: A long and winding road, with a twist of lemon An insurer’s obligation of pre- contractual disclosure."— Presentation transcript:

1 From ‘Buyer beware’ to ‘Seller be fair’: A long and winding road, with a twist of lemon An insurer’s obligation of pre- contractual disclosure

2 Woodruff, Selection of Cases on the Law of Insurance, 1924 What do they know of the law of the insurance contract who only the law of contract know?

3 Bill Murray

4 William Murray, 1 st Earl of Mansfield

5 The River Tay, Perth

6 Preamble to 43 Eliz c 12, 1601 upon the loss or perishing of any ship there followeth not the undoing of any man, but the loss lighteth rather easily upon many than heavy upon few, and rather upon them that adventure not than upon those who do adventure; whereby all merchants, specially those of the younger sort, are allured to venture more willingly and more freely.

7 Chandelor v Lopus (1603) Cro Jac 4; 79 ER 3 Sale of a bezoar stone. But it wasn’t a bezoar stone.

8 Caveat emptor Let the buyer beware

9 New Orleans, Louisiana

10 Sir George Jessel MR, 1875 If there is one thing which more than another public policy requires it is that men of full and competent understanding shall have the utmost liberty of contracting, and that their contracts when entered into freely and voluntarily shall be held sacred and shall be enforced by Courts of justice. Therefore you have this paramount public policy to consider - that you are not lightly to interfere with this freedom of contract.

11 Fort Marlborough, Sumatra

12 De Hahn v Hartley, 1786 Sailed from Liverpool with 14 six- pounders, swivels, small arms, and 50 hands or upwards; copper-sheathed

13 Bourgeois v Northwestern National Insurance Company, 1893 Prior to [this Act’s] passage there were as many different contracts of insurance as there were companies. … new clauses and conditions were being constantly inserted, generally ingeniously worded and obscurely printed; and, singularly enough, these new conditions were always in the Interest of the insurer, and not of the insured

14 The Skandia case In the pantheon of international fraudsters the ingenuity and scale of Mr. Ballestero’s fraud entitles him to a high place. Steyn J

15 Skandia: A complex case The trial of the 4 related commercial actions that made up the Skandia case lasted 38 days before Steyn J; Hodge’s appeal to the Court of Appeal 24 days; the banks’ appeal to the House of Lords 6½ days. The costs of this ‘legalfest’ were “borne ultimately by helpless customers and hapless shareholders”. Lord Templeman

16 The fraud exclusion The fraud exclusion excluded liability in respect of: any claim or claims arising directly or indirectly out of or caused directly or indirectly by fraud, attempted fraud, misdescription or deception by any person, firm, organisation or company.

17 Skandia, House of Lords Lord Bridge of Harwich Lord Brandon of Oakbrook Lord Templeman Lord Ackner Lord Jauncey of Tullichettle

18 Section 13 of the ICA A contract of insurance is a contract based on the utmost good faith and there is implied in such a contract a provision requiring each party to it to act towards the other party, in respect of any matter arising under or in relation to it, with the utmost good faith.

19 Section 12 of the ICA … this Part does not have the effect of imposing on an insured, in relation to the disclosure of a matter to the insurer, a duty other than the duty of disclosure.

20 Optional pre-contractual requirement to disclose Subject to s 71(1), the ICA prevents an insurer from taking advantage of various rights, benefits or entitlements unless it informs an intending insured of certain matters prior to the making of an insurance contract: See sections 22, 37, 44(1), 68(1), 34-36, 49(1) and 58.

21 Corporations Act 2001, Chapter 7 Chapter 7 consists of 12 Parts and over 600 sections, stretching from s 760A to s 1101J. Many of the sections contain sub-sections, sub-sub-sections and sub-sub-sub- sections, and in the case of s 1041B, mind- bending sub-sub-sub-sub-sections 1041B(2)(b)(ii)(A) and (B), with an explanatory note!

22 Pre-contractual obligation to disclose to a ‘retail client’ General advice, personal advice, Product Disclosure Statement

23 Joe diMaggio – The Yankee Clipper

24 ‘The Life of Samuel Johnson, LLD’ 1791, James Boswell [Dr Johnson] would not allow Scotland to derive any credit from Lord Mansfield; for he was educated in England. ‘Much (said he,) may be made of a Scotchman, if he be CAUGHT young.’


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