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

(2) The warranty is relevant to only some sections of the policy. For
example, in Printpak v AGF Insurance Ltd, the insured had taken out a
“commercial inclusive” policy, which covered a range of risks, including
fire and theft. 58 The theft section included a warranty that the insured
would maintain a burglar alarm. Meanwhile Condition 5 stated that a
failure to comply with any warranty would invalidate any claim. The
insured suffered a fire while the alarm was not working. The Court of
Appeal held that the policy was not a seamless document, but instead
consisted of separate schedules, each concerned with a different type of
risk. Despite the wording of Condition 5, the alarm warranty only applied
to the theft risk and not the fire risk.
(3) The wording of the warranty does not apply to the facts in question.
The leading case is Provincial Insurance Co v Morgan. 59 Here coal
merchants declared that their lorry would be used for coal, which became
the basis of the contract. On the day of the accident, the lorry was also
used to carry Forestry Commission timber. However, at the time, the
timber had been unloaded and only coal was on board. The House of
Lords held an endorsement on the policy stating that the use was
“transportation of own goods in connection with the insured’s own
business” did not mean that the vehicle was to be used exclusively for
the insured’s own goods. On “a strict but reasonable construction” the
declaration and the clause only meant that transporting coal was to be
the normal use. Transporting other goods would not terminate liability
under the policy. 60
2.56 Alternatively, the court may hold that a term is not a warranty but either a
condition precedent to a particular type of claim under the policy or a “description
of the risk” for which the insurer is liable. 61
58
59
[1999] Lloyd’s Rep IR 542.
[1933] AC 240.
60
See also English v Western [1940] 2 KB 156; and Houghton v Trafalgar Insurance Co Ltd
[1954] 1QB 247.
61 In principle a term might also be categorised as a innominate term, which will allow the
insurer to terminate the contract only if it is deprived of the substance of what it was
contracting for; or as a mere term (what in general contract law would be termed a “mere
warranty”) that gives rise only to damages for any loss caused. The courts have sought to
classify notice requirements as innominate terms but we have not found any example of
other terms being classified in this way.
37