Contract Act
Sanjeev Panda
(Querist) 13 March 2010
This query is : Resolved
The insurance companies do put stipulations in the insurance agreements to the effect that if the insured does not make a claim within a specified period from the time of damage, the company shall not be held liable for such loss or damage. Are such stipulations in agreements valid and binding in law?
Raj Kumar Makkad
(Expert) 13 March 2010
Yes. As they do form part of agreement so this clause is valid and thus binding over both the parties.
Sanjeev Panda
(Querist) 15 March 2010
Thanx Sir, but I am quite confused with the amendment of Section 28 of the Contract Act w.e.f 08/01/1997 and wordings of Section 28(b) which is as follows:
"Which extinguishes the right of any party thereto, or discharge any party thereto from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to that extent"
The effect of the amendment of Section 28 makes it clear that any clause extinguishing the right of a party or discharging any party from the liability in respect of any contract on expiry of specific period so as to restrict the time period would be void. Thus, the clauses providing for extinction or discharge of the rights of the parties on the expiry of the specified period are also covered by inserting Clause (b) in Section 28 of the Contract Act and thus void, there are various judgements of Delhi High Court on this point.
