Allianz Insurance Company – Eygpt (“Allianz”) v. Aigaion Insurance Company S.A. (“Aigaion”) EWCA Civ 1455 concerned the issue of whether negotiations for marine reinsurance had concluded in a contract. The negotiations were conducted via a broker between offices in different countries. During the negotiations, Aigaion had quoted terms that included a class warranty clause. The terms, including the class warranty clause, were agreed by the broker subject to contract but when the broker emailed the slip to Aigaion the class warranty clause had been inadvertently omitted. Aigaion replied to the broker noting that “cover is bound… as we had quoted” but did not expressly refer to the class warranty clause (although the class warranty clause was part of the original quote).

The question before, firstly, the High Court and then, on appeal, the Court of Appeal was whether Aigaion’s reply to the broker was an acceptance of the terms of the slip (which did not have the class warranty clause) or a counter-offer proposing the same terms as the slip but with the addition of the class warranty clause (i.e. by virtue of the fact that the reply referred to terms “as quoted” and the class warranty clause being part of the terms quoted). The Court of Appeal agreed with the High Court and found that, on a construction of the emails, Aigaion’s reply was an agreement to the terms of the slip, in ignorance of the fact that the slip did not contain the class warranty clause. In making this finding, the Court of Appeal seemed particularly persuaded by the use of the words “cover is bound” so as to make it impossible that there was a counter-offer if it was said by the reinsurer that it was bound to the reinsurance. The reply by Aigaion was an acceptance. Accordingly, a contract had been concluded but one which did not include the class warranty clause. Aigaion was therefore liable to meet the claims presented by the reinsured, Allianz, under the contract.

The case shows the importance of both parties to a contract being unequivocally clear as to the terms of the agreement reached and to ensure those terms are accurately recorded in the contractual documentation.