The court set out the elements to be satisfied before ordering a rectification of a commercial contract, in particular, the need for an antecedent agreement with outward expression of a common intent, and convincing evidence sufficient to discharge the burden of proving a common mistake in translating the previous agreement into contractual form.
Held: Those negotiating the contract each assumed that their agreement on a certain matter would have a certain effect, but they had never discussed and agreed upon that effect. There was not enough for rectification: ‘Mr Lee and Mr Mitchell plainly agreed that the Oct. 3 addendum should be deleted from the slip policy. We do not believe that either of them gave precise consideration to the effect of this deletion. It may be that Mr. Mitchell assumed that it would relieve the insurers from all risk arising from vandalism, sabotage and malicious mischief. It may be that Mr. Lee had a similar belief. If they both shared that belief this would not establish a claim for rectification of the policy.’ and ‘Where a policy provides cover against one of two or more concurrent causes of a casualty, a claim will lie under the policy provided that there is no relevant exclusion. Where, however, a policy contains an express exclusion of cover in respect of loss resulting from a specified cause, underwriters will be under no liability in respect of a loss resulting from that cause, notwithstanding the fact that there may have been a concurrent cause of the loss which falls within the cover.’
Insurer’s appeal from order for payment under claim on ship policy – fire caused by third party.
Judges:
Lord Phillips of Worth Matravers MR
Citations:
[2002] EWCA Civ 1070, [2002] 2 Lloyd’s Rep 581, [2002] 2 Lloyd’s Rep 581, [2002] 2 LLR 581
Links:
Jurisdiction:
England and Wales
Citing:
Cited – Wayne Tank and Pump Company Ltd v Employers Liability Assurance Corporation Ltd CA 1973
The court discussed the effect of an exception clause in an insurance policy: ‘The effect of an exception is to save the insurer from liability for a loss which but for the exception would be covered. The effect of the cover is not to impose on the . .
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: 15 July 2022; Ref: scu.175191