Answer To: The Business School BULAW 1503 Assignment Length: 2000 words (approximately).For more information on...
David answered on Dec 20 2021
Running Head: LAW ASSIGNMENT
Running Head: LAW ASSIGNMENT
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LAW ASSIGNMENT
Law Assignment
Name
Institution
Question (a)
The Duty of Disclosure Required by Allinsurance and Jason
Jason’s Duty of Disclosure
Subject to the Insurance Contract Act of 1984, Jason has a duty to disclose to Allinsurance, before the insurance contract is entered into, all information known to him about the house relevant to the decision (made by the insurer) of whether or not to accept the threat, and on what terms. Secondly, the duty of disclosure do not require Jason disclose information that reduces the risk, information that is of common knowledge, information that Allinsurance knows, or information that will result in waiving the disclosure. Finally, the duty of disclosure requires that Jason shall be considered to have waived the compliance of the duty of disclosure if he fails to answer or gives an irrelevant or obvious answer to the questions asked by Allinsurance (“Insurance Contracts Act 1984,” 2003, pp. 20-21).
Allinsurance’s Duty of Disclosure
The Act will consider Allinsurance to have ignored compliance with the duty of disclosure when it fails to request Jason to answer one or questions that are more specific considered relevant to the contract decision. In addition, the duty of disclosure requires that Allinsurance made it known to Jason that he is not to provide information that is not covered under section 21 and subsection 21A of the Act (“Insurance Contracts Act 1984,” 2003, pp.20-21). It is recommended that both the insurer and the insured know that the duty of disclosure must be retained in modified form. If Allinsurance wishes to rely on innocent no-disclosure, it should warn Jason before commencing the contract (Law Reform Commission, 2011, p. 85).
It is important to note that the duty of disclosure required by Allinsurance and Jason is subject to three important restrictions, which include the test of materiality, which should not be based on prudent underwriter, rather focus on prudent assured. Secondly, under subsection 21A, the duty of disclosure can be waived in respect to domestic policy that covers residential premises unless Allinsurance asks specific questions. Finally, under subsection 22, it is the duty of Allinsurance to inform Jason of the duty of disclosure. If they fail to do this, they cannot rely on it unless Jason has been fraudulent (Law Reform Commission, 2011, p. 85).
A Case on non-disclosure
Mr. Robert insured his hotel through a Lloyd’s broker. His hotel operated a discotheque, which Lloyd was shown on inspecting the premise before the contract was entered into. Accidentally, one day a fire broke out in the hotel. Mr. Robert made a claim of approximately $70,000 loss. However, Lloyd’s broker sought to avoid the claim on the ground that Robert made a non-disclosure of the discotheque. Hodge J., the judge, found out that the information had been waived and therefore, criticized the defence presented by Lloyd’s broker. He asserted that if the insurers’ argument is correct, Mr. Robert is yet another victim of the insurance industry. Hodge then made the fullest disclosure to Lloyd as a requirement of law as a procedure to determining the truth of the rejection.
Upon procedural determination of the truth of the matter, Lloyd was found guilt of the claim and was ordered to account for the loss since it was clearly brought to his full knowledge the nature of business activities that were to be undertaken under the hotel premise. There were no grounds of refusing to settle the claim. Hodge’s comments were supported by Purchas LJ during the court proceeding who made it clear that Lloyd was going against the rules of the contract agreement. He noted that under the insurance industry, it might seem unwise for someone who terms himself a broker to refuse abiding by the laws and regulations stipulated in the contract agreement. He further noted that it is unethical to go against the duty of disclosure, which is the basis of a contract agreement. It was evident that the claim...