HIH Casualty and General Insurance Ltd v Chase Manhattan Bank

is a case in English contract law that deals with issues related to misrepresentation.

Facts

Chase Manhattan Bank participated in a speculative venture by providing loans secured against the anticipated receipts from five films (Amy Foster, U Turn, Apt Pupil, The Mirror Has Two Faces, and The People vs. Larry Flynt). To reduce considerable exposure to risk, the bank obtained insurance protection from HIH Insurance. The arrangement was negotiated through intermediaries experienced in the industry since neither party possessed extensive knowledge of the film sector. When the bank submitted a claim, HIH challenged it, accusing the bank’s agents (rather than the bank itself) of negligent and fraudulent misrepresentations. The insurance agreement contained clauses disclaiming liability for misrepresentations made by the bank. A central question was whether such disclaimers could shield the bank from responsibility for misrepresentation.

Judgment

Speeches were delivered by all judges except Lord Steyn. The House of Lords majority (Lord Bingham, Lord Steyn, Lord Hoffmann, Lord Hobhouse) held that while disclaimers may exclude liability for negligent misrepresentation, they cannot do so for proven fraud. It was determined that liability for fraudulent acts committed by others could be excluded; however, exemption from liability for one’s own fraud contradicts public policy principles.

Lord Bingham remarked:

Lord Scott expressed a dissenting opinion.

In the 2008 case Biffa Waste Services v MEH, Lord Ramsey observed that the Canada Steamship Lines rules highlighted by Bingham serve as "useful interpretative guidance rather than a strict legal code."

See also

• English contract law
• Misrepresentation in English law
• JPMorgan Chase Bank v. Traffic Stream (BVI) Infrastructure Ltd.