Insurable Interest Theory

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CHAPTER 3: HISTORICAL BACKGROUND OF THE DOCTRINE OF INSURABLE INTEREST THE CONCEPT OF INSURABLE INTEREST An understanding of the concept of insurable interest from a historical perspective starts with an understanding of the development of the notion of “interest theory” according to Mothupi . According to Reinecke , the doctrine of insurable interest originated within the womb of the doctrine of interest . The doctrine of insurable interest formed part of this long adage whose origins are traced back to the Middles Ages. The doctrine was first applied in the lex mercatoria under English law according to Reinecke . Reinecke argues that De Caseregis in Discursus legales de commercio was the first writer who made use of the “doctrine of…show more content…
THE DEVELOPMENT OF THE DOCTRINE OF INSURABLE INTEREST UNDER ENGLISH LAW What has been accepted by most scholars as highlighting the necessity and development of the doctrine of insurable interest is the need to nip out wagering agreements . As noted earlier on, the doctrine of insurable interest developed as an explanatory principle of indemnity contracts. However, with time the concept was rapidly developed and accepted as a prerequisite to the validity and lawfulness of an insurance contract especially under English law as will be seen below. Scholars would like to pin the development of the doctrine of insurable interest in English law from the case of Sadler’s Co v Badcock , which ruled that if one was to characterize a contract as one of insurance, an insurable interest had to be established. This was also underscored in Prudential Insurance Co v Inland Revenue Commission where the court said…show more content…
The researcher will discuss all these case in Chapter 5 herein below. It is however important to note at this juncture that the Pre-Union Statute Revision Act 43 of 1977 repealed the South Africa legislation that had brought English law of insurance. Therefore South African courts are no longer by the English law principles. This was the reason why the court based its reasoning in Roman-Dutch principles in the case of Mutual and Federal Co Ltd v Oudtshoorn Municipality
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