CHAPTER XVI

WARRANTIES AND REPRESENTATIONS

IN the language of marine insurance the word “ warranty" is used to denote two entirely different things : 1—

S."

A. It sometimes denotes "stipulations which are exceptions to the general terms of the contract, by which the underwriter is to be exempted from certain risks, either wholly or in part" (Marshall, p. 353, note a). For instance, it is not unusual to hear the F.P.A. clause described as the F.P.A. “warranty," the F.C. and S. clause as the F.C. and warranty," and sometimes the memorandum is called absolutely "the warranty." The reason is plain; as these clauses run in the form "warranted free from," etc., it is not unnatural that they should be called "warranties." It is also not impossible that this use of the word was encouraged by underwriters, for, as will be found later, the effect of a "warranty" in the sense about to be explained is very stringent, and the application of this word to denote an exception or exemption from the general terms of the contract may have been intended as a sign of the strictness with which that exception or exemption would be interpreted by the underwriter in his own favour.

B. In the stricter sense a warranty in a contract of marine insurance is :

4

1 Cf. Arthur Cohen in Law Quarterly Review, April 1895, A warranty is a condition rendering the contract voidable in case of noncompliance, and not a stipulation for breach of which action lies. It is this essential distinction between a condition and a stipulation that Mr. Arnould and Mr. Phillips have overlooked."

I. "A stipulation inserted in writing on the face of the policy, on the literal truth or fulfilment of which

the validity of the contract depends" (Arnould,

II. A fundamental essential factor or condition inherent in each and every contract of marine insurance without

exception.

The former class of warranties being stipulations set forth on the policy are called express (or expressed) warranties. The latter being essential to the whole universe of marine insurance do not require any form of expression, appear in no policy or other document, but remain immanent and are of absolutely controlling effect: they are therefore termed implied warranties.1

I. Express Warranties.-No covenant can amount to an express warranty unless it appear written (or printed) on the face of the policy. In Pawson v. Barnevelt, 1779,2 the case turned upon the importance to be attached to a written paper of instructions, stating that the vessel insured "mounted twelve guns and twenty men," wrapped up with and enclosed in the policy when it was brought to the underwriters for signature. Lord Mansfield said it was a mere question of law, and without hearing the evidence of the defendants' witnesses (who were ready to state that a written memorandum enclosed was always considered as part of the policy), "decided that a written paper did not become a strict warranty by being folded up in the policy" (Park, p. 479). The same eminent judge ruled in Bize v. Fletcher, 1779,2 that the contents of a slip of paper wafered

1 It should be observed that the word "warranty" has in marine insurance a sense quite different from what it has in the general English law of contract, in which it is used to denote an independent subsidiary contract, breach of which does not entitle the offended party to avoid or rescind the contract, but only to take action for breach or for set-off. The covenant in contracts other than those of marine insurance, corresponding to a warranty as described above, is termed a "condition." In Hibbert v. Pigon, 1783, Lord Mansfield said, "The warranty in a contract of insurance is a condition or a contingency, and unless that be performed there is no contract (Marshall, p. 375).

2 I Dougl. 12, note 4.

But any

to the policy did not amount to a warranty. explicit reference on the face of the policy to any special rules or conditions is treated as amounting to a warranty, these rules or conditions being, although extrinsic to the policy, regarded as incorporated in the contract (Routledge v. Burrell, 17891; Pettigrew v. Pringle, 1832).2 So long as the covenant appears on the face of the policy it may be written either in the body of the policy or in the margin (Bean v. Stupart, 1778), or at the foot (Blackhurst v. Cockell, 1789), or written transversely in the margin (Kenyon v. Berthon, 1778).5 As Lord Mansfield said in the case last cited, "As to its being only in the margin that makes no difference; it is all part of the contract when it is once signed." The only thing necessary is, therefore, that it be on the face of the policy when it is signed.

3

The cases and decisions reported on express warranties date mainly from the period of the great wars of the end of last century and beginning of this. They are, consequently, chiefly concerning warranties of nationality, armament, equipment, sailing date, and convoy; these were points of such special importance to the underwriters of that period that they expressly embodied them in their form of contract with the assured.

No special form of words is essential to the validity of a warranty, the word "warranted" need not appear; e.g. in Kenyon v. Berthon, 1778,5 the words were, "In port 20th July 1776." One single word may be sufficient, e.g. the Mount Vernon, an "American" ship (Baring v. Claggett, 1802), was so described in a policy on goods carried by her, and this description was held to be equivalent to an express warranty that she was an American. The nationality of the carrying ship as described by that one word attested her neutrality, and so affected the safety of the goods loaded in her as regarded capture, seizure, or detention by enemies.

Warranties of nationality in time of war are of great importance, not only as stipulating the flag of the vessel, but as involving also the proper documenting of her in the way required by the laws of her country and the treaties of her Government with that of the country of destination (Baring v. Claggett, 1802).1

Similarly with warranties of armament and equipment. They indicate the capacity of a vessel to beat off enemies, and to have, even after hostile encounters, sufficient navigating power to complete the voyage.

As to convoys, the safety of any venture in time of war is so evidently affected by the presence or absence of a friendly armed convoy, that the risk would be to the underwriter of an entirely different character were the undertaking to sail under convoy not literally fulfilled.

Penalty for Breach.—In these cases it is evident that there is no hardship to the assured in demanding the exact fulfilment of the very words of the warranties; to pass any less strict application of them as permissible would be to deprive the warranties of the most of their value. Το prevent any misuse of warranties the penalty attaching to their non-fulfilment has been made severe; if the statement is false or the promise broken, the party to whom it is made is entitled to rescind the contract, and is discharged and exonerated.

words of a

Interpretation of Warranties.-The warranty are always to be taken in their commercial sense. Within that sense they are to be strictly and literally taken. In Bean v. Stupart, 1778,2 the warranty read, "Thirty seamen besides passengers;" only twenty-six men signed on as mariners, but there were some boys on board, besides cook, steward, and surgeon. It was held, after hearing evidence, that this crew fulfilled the requirements of the warranty, which meant merely "thirty persons engaged in navigating the ship besides passengers." In De Hahn v. Hartley, 1786,3 action was taken upon a policy insuring goods, per Juno, at and from Africa to the West

1 3 B. & P. 201.

2

I Dougl. II.

3

I T.R. 343.

Indies, containing the warranty, "Sailed from Liverpool with . . . fifty hands or upwards." The policy was held void because the Juno sailed from Liverpool with only fortysix hands, arriving in Beaumaris six hours later, and proceeding thence with fifty-two hands on board.

It was in his judgment on this case that Lord Mansfield remarked: "A warranty must be strictly complied with " On the other hand, a warranty cannot be extended by inference beyond what is necessarily contained in it. The case of Hyde v. Bruce, 1783,1 turned upon a warranty that a ship should have twenty guns; she had in fact twenty-two guns, but only twenty-five men, far too small a crew to handle the guns. But Lord Mansfield held that the warranty had been fulfilled. "If a warranty be meant to mislead, it is a fraud as much as a false representation. In this case there is no ground to impute fraud, and therefore the plaintiff is entitled to recover." No reconciliation of these judgments is possible except on the ground of literal interpretation of the commercial sense of the words expressed in the warranty, and no more.

Sailing Warranties. The same principle explains what would otherwise be a strange diversity in the sailing warranties of the period named. It was decided in Bond v. Nutt, 1777,2 that a warranty to sail by a named date is fulfilled by the vessel merely starting on her voyage by that date, even though she proceeds only within the limits of her port of loading, provided she is and remains in every point ready and able to proceed further without delay. But if the warranty runs, "to sail from" a named port by a named day, the meaning is (according to Lord Ellenborough in Moir v. Royal Exchange Assurance, 1814)3 that she should be out of the named port by that day.

Modern Warranties.—The warranties which are most in use nowadays are, in the case of certain voyages, e.g. to or from the Baltic, warranties of date of sailing (e.g. warranted sailing on or before 30th September); to San Francisco or the Far East, warranties as to the cargo of the vessel 2 2 Cowp. 601.

1

3 Dougl. 213.

3

4 Camp. 84.