The renewal that was never quite accepted

Rule. A contract needs offer, unqualified acceptance, consideration and intention to create legal relations. A renewal notice capable of acceptance is generally treated as an offer. A purported acceptance that varies a term is a counter-offer, which kills the original offer (Hyde v Wrench); a mere request for information does not (Stevenson v McLean). Acceptance must be communicated by the offeree or someone with actual or apparent authority to give it, and silence cannot normally constitute acceptance.

Apply. Dan's reply is not an unqualified 'yes'. Asking to switch from annual to monthly payment changes the payment terms and, arguably, the consideration - that is a variation, so it operates as a counter-offer. Priya had no authority from the insurer to accept a variation of its quoted terms, and in any event she communicated nothing to the insurer. Her silence is not acceptance and, on these facts, cannot bind the insurer.

Conclusion. No contract had been concluded by 02:15 on 2 March. The counter-offer was never accepted, the renewal lapsed, and there is no policy to claim under. Contrast the position had Dan simply paid the first instalment or paid the annual premium as quoted - acceptance could then be inferred by conduct, and a contract would probably have existed even though no policy document had been issued.

Rule. Under the Insurance Act 2015 the insured's duty of fair presentation requires disclosure of every material circumstance which the insured knows or ought to know. Section 19 extends the insured's 'knowledge' to include the knowledge of the agent who arranged the cover or who gave information to the insurer - so what the broker knows is treated as known by the insured. Section 5 sets out what the insured is taken to know, including matters which should have been revealed by a reasonable search of information available to it.

Apply. Priya was told that a fire loss had occurred and had been omitted from the proposal form. That knowledge is attributed to Harbour Lane Café Ltd. The insured cannot shelter behind a broker who failed to pass information on: the non-disclosure remains the insured's, together with a separate potential professional negligence claim against Priya's firm.

Conclusion. The failure to pass the information on does not cure the non-disclosure. The instruction to 'keep that quiet' also matters to the remedy: it points towards a breach that is at least reckless, and possibly deliberate, which unlocks the insurer's strongest remedy - avoidance with no return of premium - rather than the proportionate remedies available for a merely negligent breach.

Different statute, different duty. The Insurance Act 2015 would not apply, because it governs non-consumer contracts only. The Consumer Insurance (Disclosure and Representations) Act 2012 (CIDRA) would govern instead. Under CIDRA a consumer owes no duty to volunteer information at all; the duty is simply to take reasonable care not to make a misrepresentation when answering the insurer's questions, and the insurer must ask clear, specific questions.

Different remedies. Under CIDRA the classification is deliberate or reckless, careless, or innocent, and the remedy is proportionate: the insurer must put itself in the position it would have occupied had the question been answered correctly - for example charging an extra premium, applying an exclusion, or reducing the claim pro rata. Avoidance with no return of premium is reserved for deliberate or reckless misrepresentation, and even then the premium is normally returned unless the insurer would have refused the risk entirely.

But note. Harbour Lane Café Ltd is a company insuring a business, so it could never be a consumer even in a one-person operation: CIDRA covers only contracts entered into by an individual wholly or mainly for purposes unrelated to their trade or business. The consumer analysis is therefore only available on the altered facts in this question.