Warranties and Conditions Flashcards
(12 cards)
What is the difference between warranties and conditions?
Warranties are minor terms, breach of which entitles the innocent party to damages only.
Conditions are major terms, breach of which entitles the innocent party to treat the contract as repudiated as well as damages
How does the Marine Insurance Act 1906 define a warranty?
The insured undertakes that some particular thing shall or shall not be done, or that some condition shall we fulfilled, or whereby he affirms or negatives the existence of a particular state of facts.
What action does a breach of warranty in insurance law entitle an insurer to take?
Avoid the policy, irrespective of whether the breach is material to the loss
What are the two types of warranties?
Present (promise made in the application for insurance) and future (promise that something will be done or not done)
What affect did CIDRA and Insurance Act 2015 have on the consequences of breach of warranty?
Significantly diminished; present warranties to be treated as representations rather than warranties. Right to avoid policy abolished and replaced with suspension of risk during period of breach.
What action can be taken by an insurer if a suspensive condition or condition precedent is breached? Case law
Avoid paying claim (during the period of the breach). Farr v Motor Traders Mutual Society
Who has the burden of proof where a condition has been breached? Case law
The insurer. Sofi v Prudential Assurance
What is the consequence of not expressly setting out the consequences of breaching a claims notification condition? Case law
The insurer is bound to accept the claim, irrespective of any prejudice caused by the breach.
No half-way position to avoid the claim but leave the policy intact. Alfred McAlpine v BAI
What does a condition in a consumer insurance policy have to satisfy to be enforceable?
The requirements of the Consumer Rights Act 2015
(No unfair terms)
How is a consumer defined under the Consumer Rights Act 2015?
An individual acting wholly or mainly outside their trade, business, craft or profession
What is the test under the Consumer Rights Act 2015 for whether a condition is enforceable?
Whether the condition creates a significant imbalance in the rights of the parties
Is a condition precedent to liability requiring an insured to provide all written details & documents requested by an insurer enforceable? Case law
Yes, if the info is in the possession of the insured. Parker v NFUM
