Warranties - Continuing warranties

(Kler Knitwear Ltd v Lombard General Insurance Co Ltd, [2000] Lloyd’s Rep IR 47)

The courts have long been reluctant to give full effect to a continuing warranty in an insurance contract. The reasons for this are readily apparent: most continuing warranties are formed by means of incorporation from the proposal form; the effect of a breach is to bring the risk under the policy to an immediate end; and the duration of the breach is immaterial, so that even if the breach is repaired within a very short period the risk is not restored. There are two devices which have been used by the courts to overcome the harshness of continuing warranties: refusal to construe the warranty as imposing any post-contractual duty; and classification of the clause not as a continuing warranty but rather as a delimitation provision (otherwise referred to as a suspensory clause). The latter device was in evidence in Kler Knitwear Ltd v Lombard General Insurance Co Ltd [2000] Lloyd’s Rep IR 47 .