or negatives the existence of a particular state of SECT. 34. facts.1 (2.) A warranty may be expressed or implied.2 (3.) A warranty, as above defined, is a condition which must be fully and exactly complied with, whether it be material to the risk or not. If it be not so complied with, the insurer may avoid the contract [as from the date of the breach of warranty, but without prejudice to any liability incurred by him before such date].3 Illustrations. 1. A ship is warranted to sail from L. with "fifty hands or upwards." She sails from L. with a crew of forty-six only, but afterwards takes on six more hands. The insurer is not liable.4 2. A ship is insured from New York to Quebec, whilst there, and thence to London, and is warranted to sail from Quebec on or before the 1st of November. The ship sails from New York too late to arrive at Quebec by the 1st of November, and is lost before reaching that port. The insurer is liable." 3. Policy on ship, with warranty not to be in Gulf of St. Lawrence after the 15th of November. After the 15th of November the ship is wrecked in the Gulf. The assured gives notice of abandonment, and the insurer, with knowledge of the facts, accepts the notice. The insurer is liable, not withstanding the breach of warranty." NOTE.-The use of the term "warranty" as signifying a condition precedent is inveterate in marine insurance, but it is unfortunate, because in other branches of the law of contract the term has a different meaning. It there signifies a collateral stipulation, the breach of which gives rise merely to a claim for damages and not to a right to avoid the contract. 1 Arnould, Ed. 6, p. 599; Marshall on Insurance, p. 353. 2 Arnould, Ed. 6, p. 648; cf. Quebec Mar. Ins. Co. v. Commercial Bank of Canada (1870), L. R. 3 P. C. 234. 3 Arnould, Ed. 6, pp. 602, 604; McArthur, Ed. 2, p. 36; Lowndes, Ed. 2, p. 93; Pawson v. Watson (1778), 2 Cowp. 785; De Hahn v. Hartley (1786), 1 T. R. 343. * De Hahn v. Hartley (1786), 1 T. R. 343; 1 R. R. 221. 5 Baines v. Holland (1855), 10 Exch. 802. • Provincial Ins. Co. v. Leduc (1874), L. R. 6 P. C. 224. SECT. 34. When breach of warranty excused. Again, in marine insurance the term is used to denote two wholly different kinds of conditions. First, it is used to denote a condition to be performed by the assured. Secondly, it is used to denote a mere limitation on, or exception from, the general words of the policy. In the case of a promissory warranty, e.g. that a ship should sail on or before a particular date, the insurer may avoid the contract if the warranty is not strictly complied with. But take the case of the warranty "free from capture and seizure." The assured does not undertake that the ship or cargo shall not be captured. There is merely a stipulation that the policy shall not apply to such a loss. The bracketed words of subsect. (3) represent the American rule.1 The point is said by Arnould not to have been decided in England.2 In the analogous case of deviation the rule is clear. The policy is only avoided from the time of deviation. It is often said that breach of a warranty makes the policy void. But this is not so. A void contract cannot be ratified, but a breach of warranty may be waived.3 A breach of warranty in insurance law appears to stand on the same footing as the breach of a condition in any other branch of contract. When a breach of warranty is proved the insurer is discharged from further liability, unless the assured proves that the breach has been waived. § 35.—(1.) Non-compliance with a warranty is excused when, by reason of a change of circumstances, the warranty ceases to be applicable to the circumstances of the contract, or when compliance with the warranty is rendered unlawful by subsequent legislation.5 (2.) Where a warranty is broken, the assured cannot avail himself of the defence that the breach has been remedied, and the warranty complied with, before loss.o 1 Phillips on Insurance, § 771. 2 Arnould, Ed. 6, p. 604; but see Lowndes, Ed. 2, p. 93, citing Baines v. Holland (1855), 10 Exch. 802, which seems in point. 3 See Quebec Mar. Ins. Co. v. Commercial Bank (1870), L. R. 3 P. C. at p. 244; Provincial Ins. Co. v. Leduc (1874), L. R. 6 P. C. at p. 243; and see Owen's Notes and Clauses, Ed. 3, p. 120. ♦ Barnard v. Faber (1893), 1 Q. B. 340, C. A. (fire policy). 5 Arnould, Ed. 6, p. 605; McArthur, Ed. 2, p. 37. 6 De Hahn v. Hartley (1786), 1 T. R. 343 (express warranty); Quebec Mar. Ins. Co. v. Bank of Canada (1870), L. R. 3 P. C. 234 (implied warranty). NOTE. The cases, in terms, assume that there is no distinction SECT. 35. between the effects of an express and implied warranty. Suppose a ship is warranted to sail on or before a particular day, but owing to the outbreak of war she has to wait for convoy. Probably in that case the policy never attaches, and the section is right as it stands.1 warranties. § 36.-(1.) An express warranty may be in any form Express of words from which the intention to warrant is to be inferred.2 (2.) An express warranty must be included in, or written upon, the policy, or must be contained in some document incorporated by reference into the policy.3 (3.) An express warranty does not exclude an implied warranty, unless it be inconsistent therewith.4 -- NOTE. The following are instances of express warranties which in recent years have been the subject of judicial interpretation :— "Warranted-per cent. uninsured." 5 66 66 Warranted, no iron or ore in excess of registered tonnage." 6 "Warranted, no St. Lawrence between October 1 and April 1.”7 "Sailing on or after March 1st." & "98 § 37.-(1.) Where a ship is expressly warranted Warranty 'neutral," she must be neutral at the commencement trality. 1 See Hore v. Whitmore (1778), 2 Cowp. 784 (effect of embargo). 2 Arnould, Ed. 6, p. 601; cf. De Hahn v. Hartley (1786), 1 T. R. 343; Behn v. Burness (1863), 32 L. J. Ex. 204, 205. 3 Arnould, Ed. 6, p. 600, and Bean v. Stupart (1778), 1 Dougl. 11. 4 Quebec Mar. Ins. Co. v. Bank of Canada (1870), L. R. 3 P. C. 234; Sleigh v. Tyser (1900), 2 Q. B. 333 (seaworthiness). 5 Roddick v. Indemnity Mutual Ins. Co. (1859), 2 Q. B. 380 (subsequent honour policy); General Ins. Co. of Trieste v. Cory (1897), 1 Q. B. 335 (insolvency of insurer). 6 Hart v. Standard Mar. Ins. Co. (1889), 22 Q. B. D. 499, C. A. ("iron" includes steel). Birrell v. Dryer (1884), 9 App. Cas. 345. Sea Ins. Co. v. Blogg (1898), 1 Q. B. 27, affirmed 2 Q. B. (1898), 398, C. A. (what is a "sailing"?). As to sailing warranties, see further, McArthur, Ed. 2, p. 37; Lowndes, Ed. 2, p. 94. of neu SECT. 37. of the risk, and it is an implied term of the warranty that [so far as the assured can control the matter], she shall continue neutral during the risk.1 No implied warranty of nationality. (2.) Where a ship is expressly warranted "neutral" there is an implied condition that [so far as the assured can control the matter], she shall be properly documented, that is to say, that she shall carry the necessary papers to establish her neutrality, and that she shall not falsify or suppress her papers, or use simulated papers. If any loss occurs through breach of this condition the insurer may avoid the contract.2 (3.) Where goods or other movables are expressly warranted "neutral" there is an implied condition that they shall be neutral-owned throughout the risk, and properly documented, and shall be shipped [by a neutral ship] to a neutral destination, and that [so far as the assured can control the matter] the ship shall continue neutral throughout the risk. 3 NOTE.-In an old case a ship not properly documented was held unseaworthy; but the case seems to come under this section. The implied conditions may of course be negatived or varied by the terms of the particular express warranty. The conditions of maritime commerce and war have altered so much in recent years that it would be misleading to attempt to deduce any rules from the numerous decisions at the beginning of the last century as to the effect of the warranty to sail with convoy.5 § 38. There is no implied warranty as to the nation 1 Arnould, Ed. 6, pp. 621, 622. 2 Arnould, Ed. 6, p. 680. As to documents, see Arnould, Ed. 6, p. 681, and Trinder v. Thames and Mersey Mar. Ins. Co. (1898), 2 Q. B. at p. 128, per Collins, L.J.; and as to simulated papers, see Arnould, Ed. 6, p. 685. 3 Arnould, Ed. 6, pp. 621, 622. Qu. if the Declaration of Paris affects the rule that the goods must be shipped by a neutral ship? + Steel V. Lacey (1810), 3 Taunt. 285. 5 See Arnould, Ed. 5, pp. 620, 698; also Owen's Declaration of War, p. 386. ality of a ship, or that her nationality shall not be SECT. 38. changed during the risk.1 In Dent v. Smith, cited below, Lush, J., points out that the fact that there was no decision on any such implied warranty was very good evidence that no such warranty existed. The facts were as follows: Policy on a parcel of gold shipped on the ss. Dutchman, which was a British ship. Next day the ship was transferred to Russian owners. In consequence of damage to the ship the gold had to be landed in Turkey, and deposited with the Russian consul. In Turkish territory all matters relating to shipping have to be decided by the consular court of the country to which the ship belongs. The Russian Consular court made the shippers pay salvage charges, which would not have been payable by English law, as a condition to releasing the gold. Held, that the risk had not been varied, and that the assured was entitled to recover these charges as a loss by perils of the seas. But suppose the shipper had also been the shipowner? Possibly in that case it would be held that the loss was the consequence of his own act, and not of the perils of the seas. As to the express warranty of nationality, see Arnould, Ed. 6, pp. 122, 136, 620. of good 39. Where the subject-matter insured is warranted Warranty "well" or "in good safety" on a particular day, safety. it is sufficient if it be safe at any time during that day.2 of sea § 40.—(1.) In a voyage policy there is an implied Warranty warranty that at the commencement of the voyage the worthiness ship shall be seaworthy for the purpose of the particular of ship. adventure insured.3 (2.) Where the policy attaches while the ship is in port, she must also, at the commencement of the risk, 1 Dent v. Smith (1869), L. R. 4 Q. B. 414. 2 See Lowndes, Ed. 2, p. 91; Blackhurst v. Cockell (1789), 3 T. R. 360 (ship). 3 Arnould, Ed. 6, p. 648; McArthur, Ed. 2, p. 13; Lowndes, Ed. 2, p. 98; Biccard v. Shepherd (1861), 14 Moore P. C. at p. 493. |
