Third party rights

Contractual liability under the 1930 Act

Liability policies are primarily aimed at tortious liability incurred by the assured. Many types of policy exclude contractual liability incurred in circumstances under which there would be no liability but for the contract: the purpose of this wording is to allow the assured to recover where the liability is either tortious alone, or arises concurrently in contract or tort in respect of a breach of duty, but not where the liability is purely contractual. However, there is no reason why a liability policy ought to exclude contractual liability, and many do not do so, eg, product liability policies which cover the liability of the assured for the supply of defective goods. If a liability policy does cover contractual liabilities, and the assured becomes insolvent, can the third party use the Third Parties (Rights Against Insurers) Act 1930 to claim against the insurers? In Re OT Computers [2003] EWHC 2490 (Ch), forthcoming in [2004] Lloyd’s Rep IR, Sir Andrew Morritt V-C thought not.