Lloyd's Maritime and Commercial Law Quarterly
Of cooperation clauses and uberrima fides in insurance contracts
H.Y.Yeo *
Alfred McAlpine
v. BAI (Run-off)
The breach of cooperation provisions (such as notice conditions) can spawn varying consequences depending on how they have been styled. A growing concern is that insurers are increasingly applying formidable defences—including major contractual breach techniques (which were previously marginalized in the insurance context) as well as breach of the duty of
uberrima fides—to avoid payment for transgression of such terms (which can be considered to be of an ancillary nature). The contractual innominate technique also appears to be gaining currency in the insurance vocabulary. The present paper examines the ambit and inter-play of the various defences attempted in the recent case of
Alfred McAlpine v.
BAI (Run-Off).
A. Introduction
Insurance law has often been criticized on the ground that it bestows many unfair advantages on insurers, such as non-disclosure1
and warranties,2
which have ensnared many an unwary insured.
The recent case of Alfred McAlpine Plc
v. BAI (Run-Off) Ltd
3
revolves around the insurer’s attempt to take the breach of what has hitherto been considered to be an ancillary term in insurance law and to have it elevated to a major contractual repudiatory term so as to avoid responsibility for a workman-injury claim. During the appellate proceedings, BAI asserted that non-compliance of the following instruction in cl. 1(a) of their insurance policy (under the heading of “Claims Conditions”),
In the event of any occurrence which may give rise to a claim under this policy, the insured shall as soon as possible give notice thereof to the Company in writing with full details…,4
amounted to a breach of the insured’s duty of good faith or to a repudiation of the contract, discharging the insurer from liability under the policy. In fact, BAI had additionally argued during the hearing before Colman, J., that the condition also constituted a precedent to liability, despite the absence of such a stipulation in the policy (but they did not continue with this line of argument when they subsequently filed their appeal).
* Associate Professor of Law, National University of Singapore.
1. See, e.g., R.A.Hasson, “Uberrima fides
in insurance law-a critical evaluation” (1969) 32 M.L.R. 617; and Law Commission, Insurance Law-Non Disclosure and Breach of Warranty:
Law Com. No. 104 (Cmnd. 8064).
2. See, e.g., R.A.Hasson, “The basis of the contract clause in insurance law” (1971) 34 M.L.R. 29; and Law Reform Committee, Conditions and Exceptions in Insurance Policies
(Cmnd. 62).
3. [2000] 1 Lloyd’s Rep. 437 (C.A.); aff’g
[1998] 2 Lloyd’s Rep. 694 (Colman, J.).
4. [2000] 1 Lloyd’s Rep. 437, 440.
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