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.