ABSTRACT
This divergence in approach is particularly interesting as the United States courts, like their Anglo-Commonwealth counterparts, recognise the 18th century case of Carter v Boehm4 as laying the foundation for their position. In this case, the insurer had set up as a defence against the insured, the argument that the insured had not disclosed (in a marine policy) a highly material fact, namely, the weakness of Fort Marlborough on the island of Sumatra and the probability that the Fort would be attacked by the French. Lord Mansfield, in
rendering judgment, included what was to become the widely quoted observation that:
The special facts, upon which the contingent chance is to be computed, lie most commonly in the knowledge of the insured only; the underwriter trusts to his representation, and proceeds upon confidence, that he does not keep back any circumstances within his knowledge, to mislead the underwriter into a belief that the circumstances does not exist, and to induce him to estimate the risk, as if it did not exist.5
