On-line version ISSN 1466-3597
VAN ZYL, Rika. Acceptance requirement in life insurance contracts. De Jure (Pretoria) [online]. 2015, vol.48, n.1, pp. 17-35. ISSN 1466-3597. http://dx.doi.org/10.17159/2225-7160/2015/V48N1A2.
In the South African stipulatio alteri it is a requirement that the beneficiary must accept the benefit in order for his right to vest. This is against the "privity of contract" doctrine where one may not put the beneficiary of a life insurance contract under any obligations. It seems, however, that the obligation of acceptance by the beneficiary has become set in the South African law through our old writers and legislation that failed to interpret the principle clearly and resulted in a unique application of the agreement on behalf of a third party in South Africa. A distinction must also be drawn between revocable and irrevocable life insurance contracts and the impact thereof on the acceptance by the beneficiary. The moment of acceptance by the beneficiary has important implications for the application of the rights for the beneficiary. Acceptance by the beneficiary before the death of the life insured, seems to have no effect, and no rights vest for the beneficiary. It is only after the death of the life insured that the nominated beneficiary can accept, and with this a right immediately vests in the beneficiary. The question of what the beneficiary must accept, may be seen as nugatory as this is confirmation that acceptance by the beneficiary should not be an obligation or a requirement before the right vests. Otherwise, the third party creates a right for himself by his actions, which is not the intention of a contract in favour of a third party. A look at English law might shed some light on the South African position because of the fact that they implemented a set of formal rules regarding a contract in favour of a third party. It is suggested that South Africa should also include a set of formal rules in legislation to govern the unique South African application of the stipulatio alteri.