Page:EB1911 - Volume 14.djvu/708

MARINE INSURANCE] arrangement is made, then a reasonable premium is payable. The same holds where additional premiums have to be charged at a rate to be arranged and no arrangement is made.

It is evident that in nearly all the particulars of any adventure insured by an underwriter he is entirely dependent upon the insured for correct information. It is therefore the law that an insurance contract can be avoided and broken by either of the parties to it if the utmost good faith (uberrima fides) be not observed by the other. The obligation of perfect good faith is thus made reciprocal. Bad faith may show itself either in concealment or in misrepresentation. It is therefore made essential to the stability of any insurance contract that the insured must disclose before conclusion of the contract every material circumstance known by him, failing which the underwriter may avoid the contract. The insured is deemed to know every circumstance which in the ordinary course of business ought to be known by him. Every circumstance is deemed material which would influence the underwriter in his decision as to acceptance of the risk or the fixing of the rate of premium. Consequently the insured is not bound, unless specially asked by the underwriter, to disclose the favourable features of the risk offered, or matters known or presumably known by the underwriter (matters which are of common knowledge, and such as an underwriter ought in his usual business to be aware of), or matters respecting which the underwriter waives or declines information, or which any express or implied warranty renders superfluous. An agent effecting an insurance must, in addition to his principal’s material knowledge, disclose everything material known to himself, or that he should know in the ordinary conduct of his business. Every representation of material fact made to an underwriter before conclusion of a contract by the insured or his agent must be true, or the underwriter may avoid the contract. Every representation is material which would influence the underwriter in his decision as to acceptance of the risk or to fixing the rate of premium. A representation of fact is regarded as true if it be substantially correct; literal correctness is not essential. A representation of expectation or belief is true if it is made in good faith. A representation may be withdrawn or corrected before the contract is concluded. The contract is deemed to be concluded when the underwriter accepts the risk, whether the policy be then issued or not.

It frequently happens that before a vessel has completed the venture on which she is engaged arrangements have already been made for her future employment. Where a vessel is insured on time, this is of no moment as respects her insurance. It has likewise been decided that where any

insurable object is covered by a voyage policy “from” or “at and from” a named place, the policy is not rendered invalid by her not being at that place when the insurance is concluded; but, on the other hand, there is an implied condition that she will begin the venture within a reasonable time, and that if she fails in this the underwriter may avoid the contract. If the delay springs from circumstances known to the underwriter at the time of conclusion of the contract, or if the underwriter then acquiesces in it, the implied condition is nullified. If the insured abandons the venture insured, the contract expires; e.g. if, before the risk commences, the vessel’s destination is changed to one not covered by the policy. Where the policy specifies a place of departure, and the ship does not sail from that place, the risk does not attach. If, however, the vessel actually starts from her intended port of departure, and commences the venture, and thereafter it is decided to change her destination, this decision constitutes a change of voyage. In default of provision to the contrary, the underwriter may elect to avoid his insurance from the time of that decision, although the ship be still in the course she would have followed in her originally intended venture.

Should a ship depart from the proper course of the voyage she starts upon, and for which she is insured, such departure, when made without lawful excuse or justification, is termed deviation. From the moment it occurs, even though she subsequently return to her proper course without loss or injury, the underwriter may avoid his contract; but the mere intention to deviate is immaterial. Deviation occurs (1) when in a policy a course is definitely specified and the vessel departs from it; (2) when, in absence of such definite specification in the policy, the vessel departs from the course usually and customarily followed in the voyage insured. If a policy provides for several named ports of discharge, the vessel may, without committing deviation, omit to proceed to one or more; but whether she goes to all or to some she must (in absence of usage or sufficient cause to the contrary) take them in the order in which they appear in the policy, if not there is a deviation. If the policy provides for “ports of discharge” in a given district, then (in absence of usage or sufficient cause to the contrary) unless the vessel proceeds to them in their geographical order she makes a deviation. Similarly, in the case of a voyage policy, the want of reasonable despatch throughout, unless lawful excuse or justification exists, entitles the underwriter to avoid the contract from the time that the delay becomes unreasonable. As excuses for deviation or delay on the voyage contemplated by the policy, the following are regarded as valid: authorization by licence or other provision in the policy, force majeure, compliance with express or implied conditions of the policy (e.g. warranties, see below), reasonable steps taken for the safety of the ship or other objects insured, saving life, helping a ship in such distress that life may be in danger, or obtaining medical or surgical aid for some person on board. If barratry is insured against, delay arising from barratrous conduct of master or crew does not avoid the policy. A deviation ceases to be excusable unless the ship resumes her proper course and proceeds on her voyage with reasonable promptitude after the cause of the excusable deviation or delay ceases to be effective.

In every contract of insurance there are certain conditions precedent to the liability of the underwriter and incumbent on the insured, which must be fully and literally complied with, whether material to the risk or not. These conditions are known in insurance as warranties. The

name is unfortunate, as in every other branch of the law of contract it bears another meaning; still it is convenient, and its insurance signification is now firmly established. Failure on the part of the insured to fulfil a warranty literally entitles the underwriter to avoid his contract as from the moment of breach, but it does not limit his obligation up to that moment. Breach of warranty is not nullified by subsequent remedy of the breach, consequently loss occurring after breach of warranty is not at the charge of the underwriter, even although before the loss the insured has again complied with the warranty. But breach of warranty may be waived by the insurer. Breach of warranty is excused in two cases only: (a) when by change of circumstances the warranty ceases to be applicable to the contract, (b) when by subsequent legislation the warranty becomes unlawful.

Warranties are of two classes: (1) express (2) implied. Express warranties must be written or printed on the policy, or contained in some document explicitly referred to in the policy, and so regarded as incorporated in the contract. No special form of words is essential to the validity of a warranty if the intention to warrant can be inferred. Express warranties may refer to anything which the parties to the contract choose, e.g. the nationality of the vessel, her sailing on a named day, proceeding under convoy, being excluded from certain voyages or trades or the carriage of certain cargoes, being “well” or “in good safety” on a named day (in which case the warranty is fulfilled if she be safe at any time of that day). As regards nationality, if no express warranty be given there is no undertaking on the part of the insured that the vessel is of any particular nationality or that she will not change it while the risk lasts. The warranty of neutrality in case of insurance of ship or goods means that at the beginning of the risk the property concerned is actually neutral, and that as far as the insured can control the matter it shall so continue during the whole course of the risk. It is also an implied condition of the ship being warranted neutral that to the utmost of the insured’s power she must carry the papers necessary to establish her neutrality, must not falsify or suppress these papers, or use simulated papers; if this condition is broken the insurer can avoid the contract. The words of an express warranty are always to be taken in their commercial sense; within that sense they are to be strictly and literally taken. An “express” warranty does not exclude an “implied” warranty (see below) unless it be inconsistent therewith.

In addition to these expressed conditions, there are also certain essential factors or conditions inherent in each and every contract of marine insurance without exception; these are implied warranties, which are presumed from the very fact of the making of the insurance. They are (a) completion of the prescribed venture without deviation, (b) legality of the venture (viz. that the adventure insured is a lawful one, and that, so far as the insured can control it, it shall be carried out in a lawful manner), (c) seaworthiness of the ship. In a voyage policy it is an implied warranty that at the commencement of the voyage the ship shall be seaworthy for the particular venture insured. If the risk commences when the ship is in port, then she must in addition be reasonably fit to stand the ordinary dangers of the port. If the voyage insured is one in which different degrees of peril are to be encountered, or for which the ship needs different kinds of outfit at different stages, then she must be seaworthy for each stage at