Application of the marine rule of automatic discharge on breach of warranty to other policies
In saying so emphatically, the Court of Appeal relied on the authority of ‘The Good Luck’ as if it were a binding authority in this jurisdiction. However, being only of persuasive authority, the Court of Appeal ought to have given opportunity for more critical analysis to determine whether such a posture is helpful in a developing economy where Insurance is viewed with skepticism and even suspicion. Will such an extension of principle from marine insurance serve the purposes of insurance when adopted in a developing economy which is seeking to build its insurance industry? Will it make insurance more attractive as a means of saving a person from financial ruin for an unforeseen event, or become a source of further skepticism as to whether insurance serves any but the purposes of insurers? The adoption of that persuasive authority is insufficiently grounded in everyday realities of life in Ghana.
It is trite law that contracts of insurance are contracts of good faith, but, with respect, the good faith is not supposed to be only on one side. How could a breach be founded on a clause that “was not part of the policy signed between the parties”? How could it then be the determining factor of rights and liabilities under the contract? Contracts are not based on speculative assumptions, or what a particular person believes to be fair, but on the specific terms agreed upon between the parties.
Valued policy distinguished from a policy of indemnity
In Chitty on Contracts (22nd ed.), Vol. 2 at paragraph 857, the following appears, “A claim under a policy of indemnity is a claim for unliquidated damages. Where the policy is a valued one the measure of indemnity is the agreed value . . .” There is nothing in the “Miscellaneous Expenses” policy (exhibit D) which shows that the appellants agreed to pay the exact sum of £G800 in the event of a loss arising within the terms of the policy. That sum clearly represents the maximum sum for which the appellants accepted liability. The obligation cast on the respondent by clause (10) of the policy by which he was to produce books of account in proof of a loss within the policy, negatives any contention that exhibit D is a valued policy. In my opinion, neither of the policies is a valued one and the learned trial judge was wrong in holding the contrary.
