Insurance Contracts CP - Law Reform Commission

on insurance regulation, but the question of controlling the use of warranties did not feature in any of
these reports. Notwithstanding the lack of scrutiny by O‟Donoghue, section 61 of the 1989 Act provided
the Minister for Industry and Commerce with a power to, by order ―prescribe codes of conduct to be
observed by undertakings in their dealings with proposers of policies of insurance and policy holders
renewing policies of insurance in respect of duty of disclosure and warranties‖. No codes of conduct have
been prescribed.
(9) Warranties – Incorporation Requirements
5.20 In cases of marine insurance, s.35(2) of the Marine Insurance Act 1906 states that an express
warranty must be contained in the policy either in its own terms or contained in some document
incorporated by reference into the policy. This statutory rule is confined to marine insurance, but, by
reference to basic contract principles, any express warranty should preferably be set out in some
documentary format such as a proposal form if the insurer is to persuade a court that a warranty was
made and/or intended. Proposal forms appear to be the most usual means of conveying warranty
obligations, but MacGillivray objects to this kind of practice on the ground that it will not be clear to the
proposer what his/her obligations are, particularly in the context of continuing obligations 52 . The recent
Irish case of Manor Park Homebuilders Ltd v AIG Europe (Ireland) Ltd 53 attests to the soundness of
MacGillivray‘s observation. Here, a rudimentary proposal form was used to gather up information on
details of premises for fire insurance cover. Statements were made as part of this process but no formal
proposal form, policy or indeed any other documentation was issued. McMahon J. held that no
warranties had been intended. The learned judge, it is submitted, could also have decided that no
warranties had been made because no documents purporting to gather the information together into a
contractual form had been created. It is noteworthy that two early Irish cases that appear to hold that
statements of fact contained in or incorporated into policy documents may be presumed to be
warranties 54 were not discussed. This situation is to be distinguished from Manor Park Homebuilders on
the ground that no policy documents were executed in Manor Park Homebuilders so there was no basis
upon which to presume a (verbal) undertaking to be an express warranty. The law thus seems to require
the insurer to provide an adequate amount of information to be provided to a proposer at the precontractual
stage and some evidence (eg documentary, recorded phone call) that a promise or statement
was given and a warranty intended, and absent such evidence, a court may be inclined to leave an
insurer to rely on whatever remedies for misrepresentation the insurer may invoke.
5.21 While both the Marine Insurance Act 1906, s.35(3), and common law principles recognise the
concept of implied warranties in general, McGillivrary points out that implied terms of fitness and fitness
for purpose are not normally implied into contracts of insurance other than seaworthiness obligations in
marine insurance. 55
5.22 The Commission provisionally recommends that the entitlement of an insurer to avoid a policy
or a claim for breach of warranty should depend on whether the insured was provided at the precontractual
stage, or contemporaneously with the conclusion of the contract, with the information required
by the duty of disclosure (as already defined in this Consultation Paper). The Commission provisionally
recommends that, in respect of promissory or continuing warranties that arise after the contract has been
agreed, the insurer must provide the proposer with a clear statement prior to the formulation of the
contract about the scope of the continuing obligations imposed upon the proposer when he or she
becomes the insured. The Commission invites submissions on how this requirement may best be
satisfied, particularly when the cover is obtained on-line.
52
53
54
55
Paragraph 10-023.
[2009] 1 ILRM 190.
See MacGillivray at 10-031, and discussions in Sceales v Scanlan (1843) 6 Ir.L.R.367 and Quin v National
Assurance Company (1839). Jo & Car 316.
Para 10-032.
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