clauses and

formal requi

sites of the

desirable that the ship should have the power of touching at of the usual such intermediate ports, the common printed form of policy invariably contains this clause:-" And it shall be lawful for the said ship, &c. in this voyage to proceed and sail to and touch and stay at any ports or places whatsoever, [

]. The blank which is left, is for the purpose of specifying the particular ports and places at which it is intended this liberty shall be exercised; and the various modes in which this blank may be filled up, together with the numerous cases decided on the construction of this clause in the policy, will be referred to at large hereafter, under the head of Deviation. (m)

10. Valuation Clause. - Open and valued Policies.

§27. The said ship, &c., goods and merchandizes, &c. for so much as concerns the assureds, by agreement between the assureds and assurers in this policy are and shall be valued at [

].

This clause is inserted in all the common printed forms of policy, though the blank it contains is not always filled

up.

If filled up, the policy is called a valued policy; if not filled up, an open policy.

When inserted, the value is or ought to be the real value of the ship, or the prime cost of the goods at the time of effecting the policy, together with the amount of the premiums and other expenses of the insurance. (n)

policy.

As will appear from the language of the clause, this valua- Valuation in tion is agreed to be final and conclusive "between the assureds

and assurers," on the particular policy; and consequently, as will appear more at large hereafter, it cannot be set aside, except in cases of fraudulent or excessive over-valuation. (0) It is not unfrequently the case, that where the interest intended to be insured requires a more specific description than that contained in the general printed form, such de

(m) See Part I. Chap. XII. (a) Stevens, Essay on Average, 5th ed. Part ii. art. i.

(0) See post, Chap. XII., on Valuation.

the policy can

not be set aside

unless fraudu lent or grossly excessive.

D

Of the usual

clauses and

sites of the

policy.

scription is inserted in this clause; as, e. g., the said ship and formal requi- goods, &c. "are and shall be valued [at one thousand pounds, being on twenty bales of cotton, marked to 20, the said twenty bales valued at that sum or [at one thousand pounds, being on the interest which I. S. has as owner in one fourth share of the said ship, the said one fourth share being valued at that sum],” or the words "valued at" are frequently struck out, and a description of the real subject of insurance then inserted without any valuation; as, e. g., the said ship and goods, &c. for so much as concerns the assureds and assurers in this policy are, "freight," or "profits," or "money lent on bottomry."

In this case it is obvious that the words "the said ship and goods," &c. are to be read as though they meant "the subject insured by this policy, as far as concerns the assured and underwriters, is taken to be freight,'' profits, 'bottomry,'

&c.

11. Enumeration of the Perils insured against.

§ 28. The next clause in the policy contains an enumeration of the perils against which the underwriters undertake to insure the property on which the policy is effected; or, in the language of the clause, which they are contented to bear, and do take upon them" in the voyage insured.

66

As the underwriter is, on plain principles, considered not to be liable to indemnify the assured against loss arising from any perils not specified in the policy or embraced in the general clause, great care has been taken to make this form of words as comprehensive as possible; and the clause in its present state may fairly be regarded as affording a protection against almost every casualty which can possibly happen in the course of any voyage, and for which it is meant that the underwriter shall be answerable. (p)

12. Clause empowering the assured to labour, &c. for the Recovery of the Property insured.

§ 29. "And in case of any loss or misfortune it shall be lawful to the Assureds, their Factors, Servants, and Assigns, to sue,

(p) See post, Part III. Chap. I., on the Risks covered by the Policy.

clauses and

formal requi

sites of the policy.

labour, and travel, for, in, or about the Defence, Safeguard, Of the usual and Recovery of the said Goods and Merchandize, or Ship, or any part thereof, without prejudice to this Insurance: To the charges whereof, we, the Assurers, will contribute each one according to the Rate and Quantity of his sum herein insured."

it.

This clause was introduced to obviate a notion which Reason of introducing appears at one time to have prevailed, that if the assured, this clause. after a loss which threatened the total destruction of the property insured, were, either by himself or his agents, to take active measures for its recovery or restoration, he would The effect of thereby lose the right to abandon, which he might otherwise have exercised. (2) The object of this clause, therefore, is to permit the assured in such cases to take every measure for the recovery of the property without waiving his right of abandonment, and also to bind the underwriters to contribute in proportion to the amount of their several subscriptions, to reimburse the assured for the expenses which he may thereby have incurred. The language of the clause is only permissive, but it has long since been settled, that it is a clear duty of the assured so to labour for the recovery and restitution of the detained or damaged property. (r)

13. Promise of the Underwriters, and acknowledgment of Receipt of Premium.

§ 30. "And so we the Insurers are contented and do promise and bind ourselves, each one for his own part, our Heirs, Executors, and Goods, to the assured, their Executors, Administrators or Assigns, for the true performance of the premises: confessing ourselves paid the consideration due unto us for this assurance by the assured," &c.

The policy, it will be observed, contains only a promise by the underwriters, without any thing in the nature of a counterpromise on the part of the assured: the reason of this is, that the premium, or, as it is described in this clause of the policy, "the consideration due unto them for the assurance," is

(9) Mitchell v. Edie, 1 T. Rep. 608.

(r) See ibid. p. 609.

Policy contains

only a promise

on the part of

the underwriters.

Of the usual clauses and

formal requi sites of the policy.

Premium in theory is always supposed to be paid beforehand: it never is so paid in practice.

Still the acknowledgment of the receipt

in the policy binds the underwriter.

always supposed to have been paid to the underwriters at the time the policy is subscribed by them, and is accordingly acknowledged to have been so paid on the face of the instru

ment.

In point of fact, the premium is never, in the actual course of London business, paid till long after the policy is effected; and is in most cases never paid in money at all, but passed in account between the insurance broker and the underwriter; the insurance broker keeping a running account with the underwriter, in which he enters him as his creditor for all premiums, and as his debtor for all losses. Whenever the losses on any one account exceed the premiums, they are payable by the underwriter to the broker a month after the settlement of the account; when the premiums exceed the losses, the underwriter, according to his judgment, either claims the balance in money, or allows it to go to his side of the account. (s)

Although, however, this is the actual course of practice, yet the acknowledgment of the receipt of premium in the of the premium policy is held binding on the underwriter, so far as to prevent him from seeking to recover his premium by an action at law from the assured himself (t); unless, indeed, there appear to have been fraud on the part either of the broker (u) or of the assured. (v)

Object of the memorandum.

It is required by the Stamp Act that the rate of premium should be expressed in the policy: this is always done by describing it as at so much "per cent," meaning on the amount subscribed by the underwriter.

14. The Memorandum.

§ 31. This is introduced into all policies for the purpose of exempting the underwriters from all liability for trivial losses, or for partial losses of any kind arising from sea damage to articles of a perishable nature.

(s) See post, Chap. V. Sect. I. art. i. (t) Dalzell v. Muir, 1 Camp. 532. De Gaminde v. Pigou, 4 Taunt. 246.

(u) Mavor v. Simeon, 3 Taunt. 497. n. (v) Foy v. Bell, 3 Taunt. 493: and see chap. v. sect. i. art. 2.

In the policies of all private underwriters in this country, Of the usual it is expressed in the following uncouth form of words:

clauses and formal requi

policy.

N.B. Corn, fish, salt, fruit, flour, and seeds, are warranted sites of the free from average unless general, or the ship be stranded. (▲)

Terms of the

Sugar, tobacco, hemp, flax, hides, and skins are warranted memorandum free from average under 5 pounds per cent. (B)

And all other goods, also the ship and freight, are warranted free from average under 3 pounds per cent, unless general, or the ship be stranded. (c)

clause in use

at Lloyd's.

memorandum.

In order to make this form of words at all intelligible, it Meaning of the must be carefully borne in mind that the word "AVERAGE as employed in this clause, means, "partial loss by sea damage;" and that the expression "WARRANTED FREE OF AVERAGE means, "so insured as to exclude all liability for partial loss by sea damage."

Hence the whole meaning of the clause is as follows:

On certain articles of a peculiarly perishable nature, enumerated in paragraph (A), the underwriter shall not be answerable for any partial loss whatever.

On certain other articles of a less perishable nature, but still very liable to be destroyed by sea damage, enumerated in paragraph (B), he shall only be answerable when the amount of damage exceeds 5 per cent of their value.

On ship, freight, and all other goods, he shall only be liable when the amount of damage exceeds 3 per cent.

But in all the three cases alike, the clause provides that the underwriter will be liable for any amount of partial loss, however small, in case the ship be stranded, and it also provides, that he shall in every case be liable for every loss, however small, of the nature of general average.

The memorandum clauses adopted by the English insurance companies vary in some respects from the form adopted by the private underwriters, as we shall see more at large hereafter. (w)

(w) Vaucher's Guide to Marine Insurance, p. 87.