Part IV Authorisation of Friendly Societies’ Business

Supplementary

I142 Contracts effected in contravention of section 31(1).

1

Where a contract of insurance or for non-insurance benefits is entered into between a friendly society and a member in contravention of section 31(1) above the member may, subject to subsection (2) below, elect—

a

to enforce the contract; or

b

to recover any money paid by him under the contract, together with compensation for any loss sustained by him as a result of having parted with it;

and the compensation so recoverable shall be such as the parties may agree or as any court of competent jurisdiction may, on the application of either party, determine.

2

Any such court may allow money paid by a member under a contract to which subsection (1) applies to be retained by the friendly society if it is satisfied—

a

that the society reasonably believed that its entering into the contract did not constitute a contravention of section 31(1) above; and

b

that it is just and equitable for the money to be retained.

3

A member who recovers the money paid under a contract to which subsection (1) above applies—

a

shall not be entitled to any benefits under the contract; and

b

shall repay any money and return any other property received by him under the contract;

and, where any property so received has passed to a third party, the reference in this subsection to that property shall be construed as a reference to its value at the time at which it was received by the member.

4

A contravention of subsection (1) of section 31 above shall not make a contract of insurance or contract for non-insurance benefits illegal or invalid to any greater extent than is provided in this section; and a contravention of that subsection in respect of a contract of insurance shall not affect the validity of any reinsurance contract entered into in respect of that contract.

I243 Interpretation of Part IV.

In this Part of this Act—

  • “authorisation” and related expressions shall be construed in accordance with section 32(9) above;

  • “class”, in relation to insurance business, means a class specified in Schedule 2 to this Act;

  • “contract for non-insurance benefits” means a contract effected in the course of carrying on any non-insurance business;

  • “friendly society”, in relation to a registered friendly society with branches, means the central body and the branches of the society;

  • “industrial assurance business” has the meaning given in section 1(2) of the M1Industrial Assurance Act 1923 or Article 3(1) of the M2Industrial Assurance (Northern Ireland) Order 1979;

  • “the 1987 Regulations” means the M3Friendly Societies (Long Term Insurance Business) Regulations 1987.