Misrepresentation, Non-Disclosure and Breach ... - Law Commission

Held covered in case of any breach of warranty as to cargo, trade,
locality, towage, salvage services or date of sailing provided notice be
given to the Underwriters immediately after receipt of advices and any
amended term of cover and any additional premium required by them
be agreed. 47
2.49 In other words, provided the insured gives prompt notice of the breach, the
insurer is obliged to provide additional cover, if necessary on amended terms and
for an additional premium. Where the parties cannot agree on the terms or
premium, the matter may be referred to a court or arbitration.
No causal connection required between breach and loss
2.50 It follows from section 33(3) that the insurer has a defence to any claim that
arises after the warranty has been broken, even if there is no causal connection
between the loss and the breach of warranty.
Later remedy irrelevant
2.51 Furthermore, the 1906 Act provides expressly that once a breach has occurred,
the fact that it has been remedied does not prevent the contract from being
discharged. Section 34(2) states:
Where a warranty is broken, the assured cannot avail himself of the
defence that the breach has been remedied, and the warranty
complied with, before loss.
2.52 For example, in De Hahn v Hartley 48 (details of which are given in Part 1 of this
Consultation Paper) 49 the insurer was discharged from liability as soon as the
ship sailed with 46 instead of 50 hands, despite the fact that this breach of
warranty was remedied before the loss occurred.
Conditions precedent to attachment of the risk
2.53 A warranty in an insurance contract has sometimes been described as a
condition precedent to attachment of the risk, or to the liability of the insurer
under the policy. 50 A term to that effect will have the same effect as a warranty,
and what we say about warranties will apply equally to a condition precedent to
the attachment of the risk. However, we will see that often the courts will construe
a condition in the contract as being only a condition precedent to a particular
claim or as a “suspensive condition”. 51
47
48
Institute Times Clauses (Hull) 1995, clause 3.
(1786) 1 TR 343.
49 See para 1.14 above.
50 See eg Lord Blackburn in Thomson v Weems 9 App Cas 671 at 683-684; (1884) 11 R (HL)
48, 51; Viscount Haldane and Viscount Finlay in Dawsons Ltd v Bonnin [1922] 2 AC 413
423 and 429, 1922 SC (HL) 156, 162 and 166; and J Birds and N Legh-Jones,
MacGillivray on Insurance Law (10 th ed 2003) para 10-2.
51 th
J Birds and N Legh-Jones, MacGillivray on Insurance Law (10 ed 2003) paras 10-7 and
10-8; see para 2.57 below.
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