End of Chapter - Pre-contractual information duty

Question 1

Consumer v. non-consumer contracts

Answer 1

In consumer contracts there is not a duty to disclose, but a duty to take reasonable care not to make a misrepresentation
In non-consumer insurance, the duty to make a fair presentation of the risk imposes the following…
- a duty not to misrepresent any matter relating to the insurance
- a duty to disclose all material facts relating to the contract

Question 2

Misrepresentation…

Answer 2

…is defined as what a ‘prudent underwriter’ would deem material rather than a reasonable person
In non-consumer insurance, an insurer may seek remedy for misrepresentation whether it is fraudulent, negligent or completely innocent
In consumer insurance, the insurer may only seek remedy for misrepresentation is it deliberate, reckless or careless
The IA 2012 excludes an innocent breach for consumers

Question 3

Duty of disclosure

Answer 3

Non-consumer insurance there is a positive duty of disclosure going beyond a duty not to merely misrepresent facts
The IA 2015 provides some guidance to determine materiality of a fact
In non-consumer business, material facts that should be disclosed include facts relating to physical and moral hazard

Question 4

In non-consumer business, what facts do not need to be disclosed?

Answer 4

• matters of law
• factors which lessen the risk
• facts known by the insurers and those which the insurers ought to know
• information that is waived by the insurers
• facts which the proposer does not know and ought not to know
• convictions that are ‘spent’ under the Rehabilitation of Offenders Act 1974, as amended by the Legal Aid, Sentencing and Punishment of Offenders Act, 2012

Question 5

Duties throughout the contract

Answer 5

Pre-contractual duties begin at the commencement of negotiations and come to an end once the contract is concluded
Parties must act in good faith throughout - remedy for the breach of good faith is determined at common law

Question 6

Breach of pre-contractual information dutis

Answer 6

In non-consumer insurance, the insurer’s remedy for breach of the duty of fair presentation of the risk depends on whether the breach is deliberate or reckless or not
In consumer insurance, the remedy for the breach of the duty to take reasonable care not to make a misrepresentation depends on whether the misrepresentation is deliberate, reckless or careless
If insurers breach the duty of fair presentation, the remedy will be designed through s. 17 of the MIA 1906
If insurers fail to act in good faith and act in poor practise, they will be required to remedy such practises and any harm suffered (new consumer duty under Principle 12)