Page 37 - Insurance Times July 2016

be carried out in a lawful manner is a good example of To determine whether there was a common intention to
a "continuing warranty". There could be other
warranties which mandate the stowing of cargo in the
holds in a given manner so that they don't shift during
voyage. This type of warranty is especially of relevance
in respect of cargo stored on the deck of the ship.
(2) Classification of promissory warranties according to
the nature of the undertaking :
Depending on the nature of the undertaking,
warranties may be divided into "affirmative warranties"
and "warranties that need to be satisfied by a positive
or negative act". The 'affirmative warranty' affirms or
negatives the existence of a particular state of facts,
like the warranty whereby the assured warrants that
the flag of the insured vessel has always been Indian.
The implied "warranty of sea-worthiness", which
requires the insured vessel to be sea worthy at the
commencement of a voyage is an example of a
warranty of this type. In cases where the assured
affirms or negatives the existence of a certain fact with
a warranty, and the affirmation or negation is proven
to be inaccurate, the insurer never comes on risk.
(3) Classification of promissory warranties according to
their structure :
According to their structure, warranties could be
express or implied. In fact, this is the classification on warranty on any matter but also to determine its
which the warranties regime in the MIA 1963 is based.
Express warranties appear in the policy or are
incorporated therein through reference to them or
through endorsement. Under the "doctrine of freedom
of contract", the number and extent of express
warranties depend upon the mutual agreement
between the assured and the insurer. Implied
warranties, on the other hand, are incorporated in
certain marine insurance policies by the provisions of
the MIA 1963 and, accordingly, their number and scope
are determined by the Act.
Express Warranties and the necessity for
their inclusion in Marine Insurance
policies
Section 37 (1) of the MIA 1963 provides that no conventional
or technical wording is required for the formulation of an
express warranty. An express warranty could be written
with any kind of wording, provided that the parties'
common intention is to give the status of warranty to the
condition/clause in question. The words "warranty'' or
"warranted" are, therefore, not essential to formulate an
express warranty.
incorporate an express warranty in the policy is not an easy
task.In the case of HIH Casualty & General Insurance Ltd.v.
New Hampshire Insurance Co.and Others (2000),the Court
of Appeals, London declared that a term is a warranty:
(a) If it goes to the root of the contract;
(b) If it is descriptive of the risk or bears materially on the
risk of loss; and
(c) If damages would be an inadequate or unsatisfactory
remedy for the breach.
Despite the fact no specific format is necessary to lay down
an express warranty, S 37(2) of the MIA 1963 requires a
warranty to be included in or written upon the policy or
contained in some document incorporated by reference in
the policy. Necessity for inclusion of an express warranty is
unique to marine insurance and has no application in non-
marine insurance. A warranty may be written in any part
of the policy document, either at the top or bottom, or
transversely on the margin, or on the back. An express
warranty does not exclude an implied warranty, unless
inconsistent therewith, vide S 37(3) of the MIA 1963.
The parties to a marine insurance contract are given a wide
range of discretion, not only to lay down an express
scope,range and reach. The express warranties that find a
special mention in the MIA 1963 are warranties of good
and beneficial safety, nationality and neutrality. Some of the
other express warranties that find frequent inclusion are:
(i) Warranties as to geographical limits
(ii) Warranty as to stowage and salvage services
(iii) Warranties as to cargo carried
(iv) Survey warranties and
(v) Premium warranties.
The Insurance Times, July 2016 37