Effect of a slip

It is settled law that the presentation of a slip amounts to an offer to the underwriters, and that their scratching of the slip constitutes an acceptance. But what is the position if the slip omits a term that the parties had agreed upon before the slip was presented? The traditional view would be that the contract takes effect according to the terms of the slip, but that there may be a subsequent application to the court for rectification of the policy to match the earlier agreement. In Allianz Insurance Company-Egypt v Aigaion Insurance Co SA (No 2) [2008] EWCA Civ 1455 the Court of Appeal has confirmed that there is a binding contract on the terms of the slip: issues of rectification did not arise. There had been earlier proceedings between the parties involving the effect of a deferred premium clause, but that matter was not at stake in the present appeal.

Allianz: the facts

The dispute related to the alleged formation of a contract of reinsurance. Allianz, an Egyptian company, appointed brokers Chedid (in Cyprus) to place a marine reinsurance contract. On 27 December 2001 Mr Wasfi of Chedid emailed Mr Tzimas, senior marine underwriter at Aigaion, offering Aigaion a proportion of the reinsurance. The slip appended to the email had a schedule that listed eight tugs (including the Ocean Dirk), each of which was classified with a member of the International Association of Classification Societies. Mr Tzimas replied on 27 January 2005, stating that Aigaion was prepared to participate subject to ‘Warranted vessels IACS classed and class maintained’. Cover was to commence on 1 April 2005.