Insurance Contracts CP - Law Reform Commission

the present was held not to be promissory in nature. Manor Park Homebuilders 41 is also in point: a
statement as to the current efficacy of an alarm was not read as a promissory warranty to keep the alarm
in working order.
5.16 Statements may be held to be suspensory conditions and/or terms descriptive of the risk. A
court may interpret a statement as being intended to describe the risk being insured against rather than to
constitute a warranty 42 . For example, where a motor policy was taken out in respect of ―commercial
travelling‖, the insurer was clearly not liable to meet a claim when the vehicle was being used as a touring
vehicle, but the English Court of Appeal observed that liability would resume if the insured use as
described was reverted to. 43 A motor insurance policy in respect of a lorry that was described as being
used to carry coal was thus held to be on cover when it was in an accident whilst carrying coal,
notwithstanding that it had shortly before been used to transport timber. The departure from the usage
suspended the cover until the warranted use resumed. 44 This reasoning on suspensory conditions is also
to be found in Brady v Irish National Insurance Co Ltd. 45 It is evident that this approach is capable of
creating a considerable level of uncertainty as to the result that will follow if statements relating to the use
to which property is to be put are litigated 46 so even well intentioned judicial efforts to soften the impact of
warranties law may exacerbate an already unsatisfactory situation.
5.17 English case-law holds that the insurer may lose any right to rely on a breach of warranty in a
variety of ways such as by making an express promise to this effect, through waiver and by estoppel
(acceptance of a premium after acquiring knowledge of breach, for example). The Good Luck 47 suggests
that the principles applicable to election are inappropriate in the context of breaches of a promissory
warranty and conditions precedent; because the contract is void ab initio there is nothing for an election to
operate against. The Good Luck raised issues relating to marine insurance and the scope of the Good
Luck has yet to be considered in Ireland. There are some older Irish cases which hold that waiver of a
right to avoid a policy 48 and unconsionability 49 may result in the policy being enforceable.
(8) Statutory Intervention
5.18 The Insurance Act 1936 sought to protect vulnerable proposers in industrial insurance
contracts from the effects of misstating the age of the insured and the consequences of details of the
health of the insured life being incorrectly provided by employees of the insurer. 50
5.19 In the period between the 1936 Act and the next significant piece of legislation addressing
contractual issues, the Insurance Act 1989, the O‘Donoghue Committee 51 delivered a number of reports
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Manor Park Homebuilders Ltd v AIG Europe (Ireland) Ltd [2009] 1 ILRM 190, following Hussain v Brown
[1996] 1 Lloyd‘s Rep. 627.
Farr v Motor Traders Mutual Insurance [1920] 3 KB 669.
Roberts v Anglo Saxon Insurance Co (1927) 27 Lloyd‘s Rep. 313.
Provincial Insurance v Morgan [1933] AC 240.
[1986] ILRM 698 (warranty suspended when pleasure craft laid up for winter).
See Kler Knitwear v Lombard General Insurance Co [2000] Lloyd‘s Rep IR 47, discussed in the Law
Commission Consultation Paper (2007) paragraphs 2.62 – 2.65. Later cases of interest include AC Ward &
Son Ltd v Catlin (Fire) Ltd [2010] Lloyd‘s Rep IR 695 and Sugarhut Group Ltd v Great Lake Reinsurance (UK)
plc [2011] Lloyd‘s Rep IR 198.
[1992] 1 AC 233; Kosmar Villa Holidays plc v Trustees of Syndicate 1243 [2008] 2 All ER (Comm) 14;
Lexington Insurance Co v Multinational De Seguros SA [2009] 1 All ER (Comm) 35; Walbrook Trustees
(Jersey) Ltd v Fattal [2009] EWCA Civ 297.
Armstrong v Turquand (1858) 9 ICLR 32; Car and General Insurance Corporate v Munden [1936] IR 584.
Tuffnell v O‟Donoghue [1897] 1 IR 360.
Sections 61-64. See O‟Callaghan v Irish National Insurance (1934) 68 ILTR 248 and Griffen v Royal Liver
(1942) 76 ILTR 82.
See the Final Report, Prl. 5330.
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