Creation and scope of policy

The decision of the Victoria Supreme Court in Leading Synthetics Pty Ltd v Adroit Insurance Group Pty Ltd [2011] VSC 467 deals with a number of points of interest both generally and in relation to credit policies. The general issues are whether a contract existed and whether it had been brought about by non-disclosure; the specific point was whether a policy came into effect where the customer whose account was protected was in debt at that stage.

Leading Synthetics: the facts

LS was the supplier of synthetic resins to customers who used it to manufacture plastic containers. One of the customers was Signum Specialities Pty Ltd (SSPL). In 2007 and 2008 SSPL purchased resins from LS on terms that payment would be made within 60 days. In the event SSPL defaulted and was placed into liquidation in November 2008, at the time owing LS some AUS$2,265,000.