450,000 being 30 per cent of an ‘agreed loss’ of US1.5m. Teare J noted that, under clause 7 of the settlement agreement, Catlin and Brit did not act as an agent of Aigaion. However, this did not change the overall result that Aigaion was bound to the assured to follow the settlement reached by Catlin and Brit. The crucial matter in interpretation was the Follow Clause, which was an agreement between Aigaion and the assured to follow a settlement by Catlin and Brit.72 The operation of the Follow Clause was not dependent upon Catlin and Brit acting as agent for Aigaion so as to bind Aigaion to the settlement. Moreover, the Follow Clause was not to be understood as authorising Catlin and Brit to act on behalf of Aigaion.73 Teare J put emphasis on the agreement between the assured and Aigaion that the latter agreed to follow the settlements reached by the leader. The Follow Clause was triggered by the Settlement Agreement to the effect of obliging Aigaion to the assured to follow the settlement reached by Catlin and Brit.
Bennett, Law of Marine Insurance, 2nd edn,  Oxford University Press. Chapter 2, Formation of Marine Insurance Contracts.
Birds et al., MacGillivray on Insurance Law, 12th edn,  Sweet & Maxwell. Chapter 2, Formation of the Contract.
Clarke, The Law of Insurance Contracts, 4th edn,  Informa. Chapter 11, Contract Formation.
Merkin, Colinvaux’s Law of Insurance, 9th edn,  Sweet & Maxwell. Chapter 1, Contract of Insurance.
Merkin et al., Arnould: Law of Marine Insurance and Average, 18th edn,  Sweet & Maxwell. Chapter 2, Form and Contents of Marine Policies.
Rose, Marine Insurance: Law and Practice, 2nd edn,  Informa. Chapter 6, The Contract.
7 See Kerr LJ, General Reinsurance Corp v Forsakringsaktiebolaget Fennia Patria  2 Lloyd’s Rep 287, at 290.
8 See Kerr LJ, General Reinsurance Corp v Forsakringsaktiebolaget Fennia Patria  2 Lloyd’s Rep 287, at 290.
9 HIH Casualty & General Insurance Ltd v New Hampshire Insurance Co  1 Lloyd’s Rep 378, CA  2 Lloyd’s Rep 161.
10 Youell v Bland Welch & Co Ltd (No.1)  2 Lloyd’s Rep 423, CA  2 Lloyd’s Rep 127.
11 Now Financial Conduct Authority (FCA).