The Marine Insurance Act 1906

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The Marine Insurance Act 1906 (“MIA 1906”) sets out a duty of utmost good faith between contracting parties in insurance contracts. This duty is unusual in English contract law and imposes a heavy burden on the parties. As a result, it has been the subject of much academic debate, culminating in statutory reforms. This essay will analyse the duty in both its traditional and revised form, focusing on whether its merits outweigh its weaknesses and whether it should be retained.

The duty in brief.

Utmost good faith (“UGF”) (or uberrima fides) imposes a requirement of honesty and of full-disclosure between contracting parties. The distinction between good faith and UGF is unclear. It has been suggested that good faith is simply ‘fair and open dealing between all contracting parties’. UGF instead imposes a negative obligation not to make misleading statements as well as a positive obligation to disclose facts which might affect the other party entering into the contract.

The roots of the duty of utmost good faith.

The principle of uberrima fides in the insurance contract has been traced back to Lord Mansfield in Carter v Boehm, with the first judicial attempt to set out the duty. He based the duty of disclosure on the fact that ‘insurance is a contract upon speculation’, highlighting the imbalance of information between the insurer and the assured. The contingency is calculated on facts which are generally only known to the assured. This was regarded by Lord
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