Report No. 21
This deals with the warranty of "good safety", and no detailed comments are needed.
General.-This deals with the warranty of seaworthiness. The section deals separately with voyage policies and time policies.
Voyage policies.-So far as voyage policies are concerned, sub-section (1) to (4) prescribe an implied warranty. The warranty is absolute, that is to say, irrespective of any fault of negligence of the assured.1
Qualification for the warranty-"seaworthiness admitted".-The warranty can be abrogated, or modified by agreement, as is usually done when the clause "seaworthiness admitted" is used. The effect of this is that the underwriter promises to pay in spite of unseaworthiness. Owners of cargo would particularly benefit by such a clause, because they have no hand in the management of the ship.2
"Time policies"-In a time policy, there is no implied warranty of seaworthiness; but if the ship is sent out with the privities of the assured in an unseaworthy state the insurer is not liable for any loss attributable to the unseaworthiness. There is no total discharge of the insurer. The reason why there is no implied warranty is,3 that the ship may be at sea and the assured may not know about the seaworthiness of the ship.
Suggestion regarding risk in the case of time policy-rejected.-It has been suggested that section 39(2) of the English Act, (which provides that where a policy attaches while the ship is in port, there is an implied warranty that the ship is able to encounter the perils of that port) should be embodied also in section 39(5). In other words, when a time policy attaches while a ship is in port, the ship should (according to the suggestion) be fit to encounter the perils of that port. After careful consideration, the suggestion has not been accepted.
A time policy is a policy for a particular period, and has no connection with a voyage as such (unless it is a combined policy). Its commencing point is not necessarily linked up with the ship's starting from a particular port. For this reason, section 39(2)port-worthiness-would not have much significance for a time policy. Secondly, in the few cases in which the commencement of a time policy synchronises with the ship's being in a particular port, the parties can provide by an express warranty for the perils of the port.
In the United States of America, authorities differ as to whether a warranty of seaworthiness is implied in a time policy. But the weight of authority is to the effect that if the vessel is in port at the time of the commencement of the risk, there is an implied warranty that the vessel is seaworthy for the risk and will, before sailing, be made seaworthy for the voyage.1
1. For the meaning of "seaworthiness", see Lord Charley, Shipping Law, 3rd Edn., p. 107, and Carver Carriage by Sea, 9th Edn., p. 80, et seq.
2. See Halsbury, 3rd Edn., Vol. 22, p. 26, para. 37.
3. Cf. Lord Chorley Shipping Law, 4th Edn., p. 317.
4. 45 Corpus Juris Secundum, Insurance, p. 563, para. 652, sub-para (1)