ABSTRACT
Accordingly, if during negotiations, the assured, in response to a question, states that the majority shareholders of the insured company are German citizens, but this does not hold true, the insurer might be entitled to avoid the contract for misrepresentation if the breach is deliberate or reckless. 21 The nature of some representations, like the one above, is such that the existence of certain facts are affirmed by the assured. Since with a warranty the assured may affirm or deny the existence of certain facts, 22 there is a similarity between some types of express warranties and representation. However, the distinction between these two concepts is a fine one and has been drawn categorically by Lord Mansfield more than 200 years ago. 23 The case commonly cited to illustrate one aspect of this distinction is Pawson v Watson , 24 where Lord Mansfield emphasised that a warranty “makes part of written policy”, whereas a representation is made outside the written contract. 25 Eight years after he delivered the above judgment, In De Hahn v Hartley, 26 Lord Mansfield offered further clarification on the matter:
There is a material distinction between a warranty and a representation. A representation may be equitably or substantially answered; but a warranty must be strictly complied with. 27
The point has been stressed again by Lord Eldon LC in Newcastle Fire Insurance Co v Macmorran & Co : 28
It is a first principle of the law of insurance, on all occasions, that where a representation is material it must be complied with – if immaterial, that
it is a part of the contract that the matter is such as it is represented to be. Therefore, the materiality or immateriality signifies nothing.
