Duty of Discl in Consumer Contracts Flashcards
What were the requirements on disclosure prior to CIDRA?
All contracts of utmost good faith and full disclosure of all material facts required
What legislation now applies in respect of disclosure?
CIDRA for consumer contracts, Insurance Act 2015 for commercial
How is a consumer defined by CIDRA?
Wholly of mainly for purposes unrelated to the individual’s trade, business or profession.
The subject matter is irrelevant.
Dual purpose = consider “wholly or mainly”
Section 2 of CIDRA applies to disclosure pre-contract. What are the key points?
Consumer to take reasonable care not to misrepresent.
Failure to comply with a request to confirm or amend particulars can be misrepresentation.
How are insurer’s rights restricted under CIDRA?
To those for misrep under law of contract generally ie representation is a statement of fact not a part of the contract but which induces the other party to enter into the contract
What is the effect of misrepresentation under the law of contract?
Contract voidable by the innocent party.
Innocent party may affirm or rescind the contract.
Damages in lieu of rescission are available.
What are the 3 circs in which misrep can arise under CIDRA?
In response to a question asked by the insurer
In info volunteered by the insured
By failure at renewal to advise of changes in risk
Points to take into consideration when determining if a consumer has taken reasonable care
Type of consumer contract & target market
Insurer’s relevant explanatory material
How clear & specific the questions were
At renewal, how clear request was
Whether an agent was acting for the consumer.
What is the standard of care required by a consumer under CIDRA?
That of a reasonable consumer - objective test
A dishonest misrepresentation is always taken as being a lack of reasonable care
What are the insurer’s remedies under CIDRA when a consumer fails to take reasonable care not to misrepresent?
More restricted than common law.
Conditional upon showing that the insurer wouldn’t have entered the contract or would have done so on different terms.
If deliberate or reckless: avoid contract, refuse all claims, keep premium.
When is a misrepresentation deliberate or reckless?
If consumer:
Knew it was untrue or misleading, or didn’t care AND
Knew matter was relevant to the insurer or didn’t care.
Burden on insurer to prove misrep was deliberate or recklessx
What are the remedies for insurers when a misrep is careless (not deliberate or reckless)?
If insurer wouldn’t have entered the contract = Avoid policy but must refund premiums paid
If insurer would have contracted but on different terms = treat as though those terms apply
If higher premium would have been charged = reduce claim proportionally
If cause of loss would have been excluded = avoid claim.
What will the FOS consider when investigating a complaint that a claim has been avoided for misrep incorrectly?
Whether the insurer has acted fairly in determining whether there was misrep
Whether there was misrep
Whether the misrep would have made any difference
Whether the customer took reasonable care
