Insurance Contracts CP - Law Reform Commission

conclusion, ―with considerable regret‖ given the hardship caused to the claimant. 21 While the incorrect
answer given by Keenan in this case was in relation to a previous trivial claim, the matter to which the
question was addressed was at least material. Where the risk is immaterial to the fact or facts that are
warranted, it is hardly surprising that there is a torrent of judicial utterances on the impropriety of such
warranty practices, even if no English or Irish case-law exists in which overt efforts to counteract
warranties have been mounted (e.g. by way of good faith or unconscionability, for example) on a
sustained basis. Even though the leading case of Anderson v Fitzgerald 22 demonstrates a concern to
limit contractual warranties 23 it is as well to bear in mind that Lord St. Leonards‘ famous dicta 24 represent
expressions of judicial impotence, not activism. In this ―difficult case‖ 25 the insurer had drafted a proposal
form for life insurance in such a way as to allow the insurer to retain premiums as well as refuse to meet
any claim on the grounds of false statements made in response to the questions in the proposal form.
There were two incorrect answers made in relation to questions posed which were clearly material to the
risk. Lord St. Leonards proposed to read down the offending clause by reading ―false‖ as meaning a
―wilful misstatement‖ rather than ―untrue statement‖. However, while finding that the Company was
correct to resist the claim, Lord St. Leonards went on to observe that ―I cannot think the Company to be
right in so framing a policy‖. 26 Lord St. Leonards stressed that the law should provide a balance between
insurance companies being able to protect themselves from fraudulent practices while affording ―a fair
security to the person with whom the policy is made, that, upon the ordinary construction of language, he
is safe in the policy which he has accepted‖. Lord St. Leonards went on to observe that if such a
warranty could be extracted in circumstances of this kind, he had no doubt:
―that that very important branch of insurance, life-insurance, will become very distasteful to
people, and that no prudent man will effect a policy of insurance with any company without
having an attorney at his elbow to tell him what the true construction of the document is. And,
indeed, in this case it has been necessary to consult all the Judges in Ireland, and they having
decided in one way upon the language of this policy, the Judges of England have been
consulted, and they have come to a different opinion [to those of their Irish Brethren]‖. 27
(5) It must be exactly complied with
5.11 While the approach taken in respect of a representation is to give the proposer a degree of
latitude in respect of trivial misstatements or omissions, 28 the same is not the case where a statement is
warranted. Strict and exact compliance is necessary. In response to a question concerning the price
paid by the owner of a motor vehicle the reply given was £285 when only £271 had been paid. The
breach of a warranty clause allowed the insurer to vitiate the policy when a claim was made: see Allen v
Universal Automobile Insurance. 29 While efforts are made to ameliorate the consequences of this rule by
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A further appeal to the Supreme Court on another point was dismissed at [1988] IR 89.
In the Irish Court of Exchequer Chamber see (1852) 1 ICLR 251: House of Lords (1853) 3 ICLR 475 and
(1853) 4 HLC 484.
Especially in the Irish Court of Exchequer Chamber by way of importing a materiality requirement into the
warranty. This position was reversed by the House of Lords.
―A policy ought to be so framed that he who runs can read. It ought to be framed with such deliberate care,
that no form of expression by which the party assured can be caught on the one hand, or by which the
company can be cheated on the other shall be found upon the face of it, and nothing shall be wanting in it the
absence of which may lead to such results‖ (1853) 3 ICLR 475 at 488.
See Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co. Ltd [1994] 3 All ER 581 at 611 (Lord Mustill).
(1853) 3 ICLR 475 at 493 – text slightly different to that at 4 HLC (text quoted is from 4 HLC).
(1853) 3 ICLR 475 at 491 (text quoted from 4 HLC at p.514).
MacGillivray, paragraph 16-024.
(1933) 45 Lloyd‘s Rep.55; Farrell v SE Lancs Insurance Co [1933] IR 36.
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