A claim was made for the rectification of an aviation insurance contract.
Lord Diplock said: ‘Rectification is a remedy which is available where parties to a contract, intending to reproduce in a more formal document the terms of an agreement upon which they are already ad idem, use in that document words which are inapt to record the true agreement reached between them. The formal document may then be rectified so as to conform with the true agreement which it was intended to reproduce, and enforced in its rectified form.’
and ‘That either or both [parties] were mistaken in their reasons for agreeing to this wording is no ground for rectification. Rectification is concerned with what the parties to a contract did agree and not with why they did so.’
Lord Diplock set out the basis of an insurance slip: ‘The slip contemplates its eventual replacement by a policy of insurance in the standard form in use at Lloyd’s for aviation risks, but subject to such deletions and additions as are indicated in the slip. Such additions are generally clauses which themselves follow a standard form and are sufficiently identified in the slip by a reference to a description or a number but some may be specially tailored to the particular requirements of the assured. In the latter case if the slip is for an original insurance the actual clause is set out in the slip itself, although it may be in only abbreviated form . . Almost invariably the slip provides that the wording of the policy is to be agreed by leading underwriter. Where this is the case the leading underwriter may occasionally consent to some clause going into the policy which was not provided for by the slip, if in his judgment it would not affect the premium. So there is the possibility of minor variations being made in the contract of insurance when the terms of the policy are agreed.’
Judges:
Lord Diplock
Citations:
[1974] 2 Lloyds Rep 301
Jurisdiction:
England and Wales
Cited by:
Cited – FSHC Group Holdings Ltd v Glas Trust Corporation Ltd CA 31-Jul-2019
Rectification – Chartbrook not followed
Opportunity for an appellate court to clarify the correct test to apply in deciding whether the written terms of a contract may be rectified because of a common mistake.
Held: The appeal failed. The judge was right to conclude that an . .
Lists of cited by and citing cases may be incomplete.
Insurance
Updated: 18 July 2022; Ref: scu.640346
