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   Home      HIH Casualty and General Insurance Ltd v Chase Manhattan Bank
 
 
HIH Casualty and General Insurance Ltd v Chase Manhattan Bank [2003] UKHL 6 House of Lords

Chase Manhattan advanced substantial sums to finance the production of a film syndicate. HIH provided insurance for the event that the film did not make enough revenue to repay the loan. Chase Manhattan made the insurance a condition of getting the loan and also specified the agent, Heath North America (HNA), that must be used to obtain the insurance. HNA obtained the insurance policies but in doing so made certain fraudulent misrepresentations and failed to disclose a report that suggested the films were unlikely to make a profit. The films did not generate sufficient revenue to cover the loan and Chase sought to claim under the insurance policy. The insurance company refused to pay out claiming to rescind the contract for misrepresentation and a failure to disclose a material factor as required under s.19 & 20 of the Marine Insurance Act 1906 (applicable to all insurance contracts not just marine insurance). S.18(3) (c) of the Act provides that the insured need not disclose information which has been waived by the insurer. The contract of insurance contained a truth of statement clause which provided:

"[6] the Insured will not have any duty or obligation to make any representation, warranty or disclosure of any nature, express or implied (such duty and obligation being expressly waived by the insurers
[7] and shall have no liability of any nature to the insurers for any information provided by any other parties
[8] and any such information provided by or nondisclosure by other parties including, but not limited to, Heath North America & Special Risks Ltd (other than section I of the questionnaire) shall not be a ground or grounds for avoidance of the insurers' obligations under the policy or the cancellation thereof."

Chase sought to rely on this clause to argue that the insurance company could not rescind the contract.

Held:

The clause was ineffective. The insurers were entitled to rescind the contract of insurance through both the misrepresentation and the non-disclosure.
 
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