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Draft
treaty wording was agreed between representatives of the parties but
was never signed by Sun Life, although the parties agreed that the reinsurance
had incepted. Sun Life subsequently issued proceedings seeking to avoid
and/or rescind the treaty for material misrepresentation and non-disclosure.
The defendant applied for a stay of proceedings, relying on a clause
in the unconcluded treaty wording which provided for arbitration in
Chicago.
It was held that whilst the parties' representatives were authorised
to agree the original contract for reinsurance, which was partly oral
and partly written, they did not have ostensible authority to bind the
parties to additional terms unless they were contained in a signed treaty.
The arbitration provision was not within such a treaty and was not therefore
binding. This was an unusual case as it was agreed between the parties
that there was a contract between them, notwithstanding that it had
incepted without either a slip or written treaty having ever been signed.
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