Warranties And Conditions Precedent - Take Care

In this article, we provide a summary of points to have in mind when drafting warranties and conditions precedent.

When agreeing a reinsurance contract, whether at renewal or for a new risk, warranties and conditions precedent may form an important element of the agreement and care must be taken in their formulation. Provisions of this nature may be included 'as standard' in many agreements but there are pitfalls for the unwary, so care is needed when drafting so as to avoid lengthy legal wrangling in the event of a dispute.

Under warranty

A warranty is a clause which goes to the root of the reinsurance contract. It can be used either to confirm the position of the reinsured at inception or to clarify the agreed way the reinsured is to conduct itself during the life of the policy.