Court Court of King's Bench | ||
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Citation(s) (1766) 3 Burr 1905, (1766) 97 ER 1162 Similar Lambert v Co‑op Insurance, Equitable Life Assuranc, Johnstone v Bloomsb, Car and Universal Finance, Erlanger v New Sombrero | ||
Carter v Boehm (1766) 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.
Contents
Facts
Mr Carter was the Governor of Fort Marlborough (now Bengkulu), which was built by the British East India Company in the island of Sumatra. He took out an insurance policy with Mr Boehm against the fort being taken by a foreign enemy. 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 attacked, 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, he was required to disclose all facts material to the risk:
Lord Mansfield went on to hold that the duty was reciprocal 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:
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:
Significance
In Manifest Shipping Co Ltd v Uni-Polaris Shipping Co Ltd Lord Hobhouse said,