Business Law Assignment 1500 words excluding references and reading list. Alex is a director and the CEO of Stylux Appliances Pty Ltd (“Stylux”). The company retails electrical appliances. The company...

Introduction
Stylux Appliances Pty Ltd also known as Stylux deals in electrical appliances. The company
maintains a taskforce of 10 trucks which is used to give home delivery facility to the customers.
Since the number of vehicles has increased, this in result has increased the number of accidents
which can’t be 100 % controlled but the company’s loss can be reduced by taking the policy of
insurance. Stylux is also interested in taking the policy of insurance for their drivers i .e. to cover
the losses which company will have to bear if the trucks met with an accident. Alex is the
director and CEO who wanted to get the trucks of company insured and approached another
director Pamela who further approached Echidna Insurance Ltd (“Echidna”) and filled the
proposal form provided by Echidna in which all the details related to drivers of the truck was
provided. The accidents which they had met in past was also included so as to decrease the
possibility of disputes in later stage.
Now after three months one of the trucks of Stylux met with the accident in which the driver was
drunk and driving. Truck was loaded with dishwashers, all got damaged, two other vehicles
which were running side by side of the truck also got damaged and one shop was also damaged.
Truck is written off in the books of accounts. As per Echidna the matter related to drink and
driving was not filled by Stylux therefore Echidna has not paid the claim when asked by Stylux
and also not interested in paying.
Since Alex and Pamela is seeking advice of a consultant regarding the whole issue, the following
points are explained in conversion with the sections of The Insurance Contracts Act 1984.
Duty of disclosure
Insurer before offering insurance or before renewing insurance needs some information from the
consumers or the persons who are going to be the policyholder. The law levies the duty of
disclosure when they pursue to take out new insurance cover or renew existing insurance cover.
The duty of disclosure is the duty to give or pass all the material information regarding risk to the
underwriters. Material information means the information which is prudent and important, which
underwriter needs to take the decision of accepting the insurance agreement or not.
It is the responsibility of policyholder that the information or disclosures provided should be
accurate and complete and all the relevant information is provided in the proposal form.
In case of
each of duty of disclosure the underwriter has the right to evade the insurance from
its commencement. If the underwriter paid the claim price and later on discovered that there was
no proper disclosure, in that case underwriter can recover back the amount already paid by him.
The duty of disclosure and consequences may vary from country to country.
Insurer or underwriter can refuse to pay the claim when they think that the policyholder has not
complied with their duty of disclosure. The insurer has to prove the valid grounds when they
efuse to pay claim and have to submit proper evidences to prove their point.
As per Section 21 of The Insurance contracts Act 1984:
“(1) Subject to this Act, an insured has a duty to disclose to the insurer, before the
elevant contract of insurance is entered into, every matter that is known to the insured, being a
matter that:
(a) The insured knows to be a matter relevant to the decision of the insurer whether
to accept the risk and, if so, on what terms; or
(b) A reasonable person in the circumstances could be expected to know to be a
matter so relevant.
(2) The duty of disclosure does not require the disclosure of a matter:
(a) That diminishes the risk;
(b) That is of common...