From ‘Buyer beware’ to ‘Seller be fair’: A long and winding road, with a twist of lemon

An insurer’s obligation of pre-contractual disclosure

Woodruff, Selection of Cases on the Law of Insurance, 1924

What do they know of the law of the insurance contract who only

the law of contract know?

Bill Murray

William Murray, 1st Earl of Mansfield1705 - 1793

The River Tay, Perth

Preamble to 43 Eliz c 12, 1601

upon the loss or perishing of any ship there followeth not the undoing of any man, but the

loss lighteth rather easily upon many than heavy upon few, and rather upon them that adventure not than upon those who do adventure; whereby

all merchants, specially those of the younger sort, are allured to venture more willingly and

more freely.

Chandelor v Lopus (1603) Cro Jac 4; 79 ER 3

Sale of a bezoar stone. But it wasn’t a bezoar stone.

Caveat emptor

Let the buyer beware

New Orleans, Louisiana

Sir George Jessel MR, 1875

If there is one thing which more than another public policy requires it is that men of full and

competent understanding shall have the utmost liberty of contracting, and that their

contracts when entered into freely and voluntarily shall be held sacred and shall be enforced by Courts of justice. Therefore you

have this paramount public policy to consider - that you are not lightly to interfere with this

freedom of contract.

Fort Marlborough, Sumatra

De Hahn v Hartley, 1786

Sailed from Liverpool with 14 six-pounders, swivels, small arms,

and 50 hands or upwards; copper-sheathed

Bourgeois v Northwestern National Insurance Company, 1893

Prior to [this Act’s] passage there were as many different contracts of insurance as there were

companies. … new clauses and conditions were being constantly inserted, generally

ingeniously worded and obscurely printed; and, singularly enough, these new conditions were always in the Interest of the insurer, and

not of the insured

The Skandia case

In the pantheon of international fraudsters the ingenuity and scale of Mr. Ballestero’s fraud entitles him to

a high place. Steyn J

Skandia: A complex case

The trial of the 4 related commercial actions that made up the Skandia case lasted 38 days before Steyn J; Hodge’s appeal to the Court of

Appeal 24 days; the banks’ appeal to the House of Lords 6½ days.

The costs of this ‘legalfest’ were “borne ultimately by helpless customers and hapless

shareholders”. Lord Templeman

The fraud exclusion

The fraud exclusion excluded liability in respect of:any claim or claims arising directly or indirectly out of or caused directly or indirectly by fraud, attempted fraud, misdescription or deception by any person, firm, organisation or company.

Skandia, House of Lords

Lord Bridge of HarwichLord Brandon of OakbrookLord TemplemanLord AcknerLord Jauncey of Tullichettle

Section 13 of the ICA

A contract of insurance is a contract based on the utmost good faith and there is implied in such a contract a provision

requiring each party to it to act towards the other party, in respect of any matter arising under or in relation to it, with the

utmost good faith.

Section 12 of the ICA

… this Part does not have the effect of imposing on an insured, in relation to the

disclosure of a matter to the insurer, a duty other than the duty of disclosure.

Optional pre-contractual requirement to disclose

Subject to s 71(1), the ICA prevents an insurer from taking advantage of various rights, benefits or entitlements unless it informs an intending insured of certain

matters prior to the making of an insurance contract:

See sections 22, 37, 44(1), 68(1), 34-36, 49(1) and 58.

Corporations Act 2001, Chapter 7

Chapter 7 consists of 12 Parts and over 600 sections, stretching from s 760A to s 1101J. Many of the sections contain sub-sections,

sub-sub-sections and sub-sub-sub-sections, and in the case of s 1041B, mind-

bending sub-sub-sub-sub-sections 1041B(2)(b)(ii)(A) and (B), with an

explanatory note!

Pre-contractual obligation to disclose to a ‘retail client’

General advice, personal advice, Product Disclosure Statement

Joe diMaggio – The Yankee Clipper

‘The Life of Samuel Johnson, LLD’ 1791, James Boswell

[Dr Johnson] would not allow Scotland to derive any credit from Lord

Mansfield; for he was educated in England. ‘Much (said he,) may be

made of a Scotchman, if he be CAUGHT young.’