Carter v Boehm
Encyclopedia
Carter v Boehm 3 Burr 1905 is a landmark English contract law
case, in which Lord Mansfield established the duty of utmost good faith or uberrimae fidei in insurance contracts.
), which was built by the British East India Company
in Sumatra
, Indonesia
. He took out an insurance policy against the fort being taken by a foreign enemy with Mr Boehm. A witness called Captain Tryon testified that Mr Carter knew the fort was built to resist attacks from natives but not European enemies, and the French were likely to attack. The French did attack, and Mr Boehm refused to fulfil the insurance claim. Mr Carter sued.
Lord Mansfield went on to hold that the duty was reciprocol and that if an insurer withheld material facts, the example cited being that an insured vessel had already arrived safely, the policyholder could declare the policy void and recover the premium.
Lord Mansfield proceeded to qualify the duty of disclosure, commenting,
Lord Mansfield found in favour of the policyholder on the grounds that the insurer knew or ought to have known that the risk existed as the political situation was public knowledge and,
English contract law
English contract law is a body of law regulating contracts in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the industrial revolution, it shares a heritage with countries across the Commonwealth , and the United States...
case, in which Lord Mansfield established the duty of utmost good faith or uberrimae fidei in insurance contracts.
Facts
Mr Carter was the Governor of Fort Marlborough (now BengkuluBengkulu
Bengkulu is a province of Indonesia. It is on the southwest coast of the island of Sumatra, and borders the provinces of West Sumatra, Jambi, South Sumatra and Lampung. The capital and largest city is Bengkulu city. It was formerly the site of a British garrison, which they called Bencoolen...
), which was built by the British East India Company
British East India Company
The East India Company was an early English joint-stock company that was formed initially for pursuing trade with the East Indies, but that ended up trading mainly with the Indian subcontinent and China...
in Sumatra
Sumatra
Sumatra is an island in western Indonesia, westernmost of the Sunda Islands. It is the largest island entirely in Indonesia , and the sixth largest island in the world at 473,481 km2 with a population of 50,365,538...
, Indonesia
Indonesia
Indonesia , officially the Republic of Indonesia , is a country in Southeast Asia and Oceania. Indonesia is an archipelago comprising approximately 13,000 islands. It has 33 provinces with over 238 million people, and is the world's fourth most populous country. Indonesia is a republic, with an...
. He took out an insurance policy against the fort being taken by a foreign enemy with Mr Boehm. A witness called Captain Tryon testified that Mr Carter knew the fort was built to resist attacks from natives but not European enemies, and the French were likely to attack. The French did attack, and Mr Boehm refused to fulfil the insurance claim. Mr Carter sued.
Judgment
Lord Mansfield held that Mr Carter as the proposer owed a duty of utmost good faith (uberrimae fidei) to the insurer under which he was required to disclose all facts material to the risk. He stated,Lord Mansfield went on to hold that the duty was reciprocol and that if an insurer withheld material facts, the example cited being that an insured vessel had already arrived safely, the policyholder could declare the policy void and recover the premium.
Lord Mansfield proceeded to qualify the duty of disclosure, commenting,
Lord Mansfield found in favour of the policyholder on the grounds that the insurer knew or ought to have known that the risk existed as the political situation was public knowledge and,
Legacy
In Manifest Shipping Co Ltd v Uni-Polaris Shipping Co Ltd [2001] UKHL 1 Lord Hobhouse said,See also
- HIH Casualty and General Insurance Ltd v Chase Manhattan BankHIH Casualty and General Insurance Ltd v Chase Manhattan BankHIH Casualty and General Insurance Ltd v Chase Manhattan Bank [2003] UKHL 6 is an English contract law case, concerning misrepresentation.-Facts:...
Rix LJ stated, "I am conscious that in Carter v. Boehm itself Lord Mansfield does seem to have considered that there was a difference between the concealment which the duty of good faith prohibited and mere silence (‘Aliud est celare; aliud tacere…). As a result, non-disclosure in the insurance context in the early years was referred to as a ‘concealment’, and the doctrine has sometimes been viewed and explained as constructive fraudConstructive fraudConstructive fraud is a legal fiction used in the law to describe a situation where a person or entity gained an unfair advantage over another by deceitful, or unfair, methods. Intent does not need to be shown as in the case of actual fraud...
. However, Lord Mansfield was seeking to propound a doctrine of good faith which would extend through the law of contract, and in that respect his view did not bear fruit. Where, however, in the insurance context it put down firm roots, it came to be seen as a doctrine which went much further than the antithesis of fraud, and, as it came to be developed, “non-disclosure will in a substantial proportion of cases be the result of an innocent mistake."
- English contract lawEnglish contract lawEnglish contract law is a body of law regulating contracts in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the industrial revolution, it shares a heritage with countries across the Commonwealth , and the United States...
- Good faithGood faithIn philosophy, the concept of Good faith—Latin bona fides “good faith”, bona fide “in good faith”—denotes sincere, honest intention or belief, regardless of the outcome of an action; the opposed concepts are bad faith, mala fides and perfidy...