CR85 Funeral policy – no consensus to conclude contract


Funeral policy – no consensus to conclude contract.


The complainant is not very literate or well educated. An agent of the insurer telephoned her and asked if she was interested in taking out funeral cover for her parents or any other family member. At the time she did not realise the full implication of the telephone conversation and gave answers to various questions raised by the agent of the insurer. Subsequently a debit order was arranged by the insurer using bank details from earlier contracts, and monthly deductions were made from her bank account. Almost two years later the complainant discovered that she had insufficient funds in her bank account and discussed the matter with her part-time employer. He asked her to obtain a copy of her bank statement and it was at this stage that she realised for the first time, with the help of her employer to interpret the bank statement, that deductions were being made by the insurer. The employer then, on her behalf, entered into correspondence with the insurer in which the complainant denied that she had requested the insurance and asked for the policy to be cancelled and a refund to be made to her. The insurer refused. The complainant, through her employer, approached our office for assistance.

We communicated with the insurer and in due course obtained a copy of the tape recording of the sales conversation. We obtained further information from the complainant and evaluated the evidence after having listened to the tape recording.

The conversation is summarised as follows: the agent telephoned the complainant and asked her if she was interested in taking out cover for her parents or any other family member. The complainant answered that she would have to think about it first. The agent then asked for her parents’ date of birth so that she could tell her what cover the insurer could give them. The complainant provided the dates of birth and the agent suggested that the insurer had a very popular cover of R 4 000 which she would send to the complainant to use the 30 day review period to go through everything and discuss with her parents. The agent then quoted the costs and cover details and asked “How does that sound?” The complainant answered “Are you going to send it to me so that I can think first?” The agent replied that she was going to confirm a couple of details, that calls were recorded and that she was going to send her the policy documents after which the complainant would have a 30 day review period in the privacy of her own home to go through everything. She then confirmed the complainant’s address and her banking details. The agent then stated “Right, your first premium if you decide to continue with it will go off in April – which date will suit you?” The complainant asked “If the policy goes through?” The agent replied affirmatively. The complainant then said “Better for the 7th”. The agent advised that the 7th would be fine and then made further general remarks about putting the policy in her will, and provided her telephone number. The complainant then asked her about other policies which she already held and said that she wanted to cancel them as she could not afford to make any further payment. The agent provided a toll free number that she could use for this purpose. The complainant then said “I will think about that, if I receive those posted things, then I will tell you what I am going to do”. The agent then said that the complainant would get the documentation in the next two to three weeks, “and you use the 30 day review period to go through everything, discuss with your loved ones, and then you contact me please. I would love to speak with you again”.


It is trite law that the meeting of the minds of the contractants i.e. consensus, is the basis of a contract. An unaccepted offer cannot create a contract. Acceptance is a declaration of will which indicates assent to the proposal contained in an offer. In this case the offer was to insure the complainant’s parents on payment by the complainant of the premiums. It was clear to us that at no stage did the complainant accept the offer of insurance during the course of the telephone conversation. She repeatedly stated that she would think about it, and requested that she be sent the details or the quote so that she could “think first”. This was not an acceptance. Nevertheless the agent apparently took this as an acceptance and seemed to think that she could send the complainant the policy as the contract had been verbally concluded. This was clearly not the case. Without a clearly expressed unambiguous acceptance of the offer, no contract came into existence and no policy should have been sent to the complainant. We conveyed this opinion to the insurer.


The insurer accepted our opinion and offered to reimburse the complainant in order to compensate for the incorrect issuing of the policy. The reimbursement consisted of the following:

1. Refund of all premium payments received;
2. Interest on the premium payments received;
3. Refund of all bank charges incurred as a result of the deductions;
4. Compensatory award of R 500.

The complainant accepted the insurer’s offer.

October 2005