Insurance Contract Law Issues Paper 2 Warranties - Law Commission
Insurance Contract Law Issues Paper 2 Warranties - Law Commission
Insurance Contract Law Issues Paper 2 Warranties - Law Commission
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APPENDIX A: THE IMPLIED WARRANTIES IN<br />
MARINE INSURANCE<br />
A.1 Here we give a brief description of the implied warranties as set out in the Marine<br />
<strong>Insurance</strong> Act 1906. In the absence of provisions to the contrary, these are to be<br />
implied into all marine insurance contracts by operation of law.<br />
A.2 The most important implied warranty is that of seaworthiness, though the 1906<br />
Act treats voyage and time polices very differently. The other warranties are less<br />
important. They cover portworthiness, cargoworthiness and legality.<br />
SEAWORTHINESS<br />
Voyage policies<br />
A.3 The most important implied warranty is that of seaworthiness, implied into voyage<br />
policies by section 39(1):<br />
In a voyage policy there is an implied warranty that at the<br />
commencement of the voyage the ship shall be seaworthy for the<br />
purpose of the particular adventure insured.<br />
A.4 “Seaworthiness” is defined by section 39(4):<br />
A ship is deemed to be seaworthy when she is reasonably fit in all<br />
respects to encounter the ordinary perils of the seas of the adventure<br />
insured.<br />
A.5 The concept is extremely wide. A ship may be unseaworthy for a range of factors,<br />
including for example, the design of the hull, the way it has been loaded, the<br />
competency and adequacy of the crew, or the lack of navigational equipment or<br />
fuel. Some breaches may be central to the risks posed by the voyage, while<br />
others may be technical. It has been held, for example, that a ship may be<br />
unseaworthy because it does not carry the correct documentation, 1 or has<br />
insufficient medicines. 2 Thus leaving port without medicines may amount to a<br />
breach of the implied warranty, which would automatically discharge the insurer<br />
from liability, even if it had no connection with the loss that occurred.<br />
Time policies<br />
A.6 By contrast, the term implied into time policies is much milder. Section 39(5)<br />
states that:<br />
In a time policy there is no implied warranty that the ship shall be<br />
seaworthy at any stage of the adventure, but where, with the privity of<br />
the assured, the ship is sent to sea in an unseaworthy state, the<br />
insurer is not liable for any loss attributable to unseaworthiness.<br />
1 Cheikh Boutros v Ceylon Shipping Lines (The Madeleine) [1967] 2 Lloyd’s Rep 224.<br />
2 Woolf v Claggett (1806) 3 Esp 257.<br />
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