BULAW1503
Assignment Semester 2, 2013
Due Date: Friday, week 8
Length: 2000 words in total (approximately).
For more information on format and other requirements, please read the relevant section in the course description
Part A (15 marks)
“At the heart of every insurance transaction is a requirement that both parties exercise utmost good faith towards each other….The principle is…sometimes expressed by saying that insurance contracts are contracts uberrimae fidae.” (Petony, Graw, Lennard and Parker, Understanding Business Law, 5th ed, Lexis Nexis, 2011, p702)
Required:
a. Explain what is meant by “utmost good faith” and why it is of particular importance in the context of insurance contracts. (10 marks)
b. How is this principle reflected in the provisions of the Insurance Contracts Act 1984 (Cth) as amended? (5 marks)
Part B (20 marks)
Miranda leased a shop as the headquarters for her cosmetics retail business, and took out an insurance policy against fire and theft. The building was later destroyed in a fierce blaze. Damaged equipment and items found on the site after the fire indicated that the premises were used not only as a shop but as a manufacturing plant for Miranda cosmetics. Miranda had not disclosed this intended use in the insurance proposal.
Required:
a. Explain to Miranda, using appropriate case law and legislation, whether the insurer can now reject Miranda’s fire claim. (12 marks)
b. Would it make any difference to your answer to Part a. of this question if an insurance investigator finds evidence of a break-in, and concludes that the fire may well have been started by burglars seeking to hide the fact they had stolen goods and equipment? (8 marks)
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