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Total Loss

Nature of a Thing, Test
Last updated: 06-Oct-2014

Asfar & Co v Blundell [1896] 1 QB 123; per Lord Esher MR:

There is a perfectly well known test which for many years has been applied to such cases as the present - that test is whether, as a matter of business, the nature of the thing has been altered. The nature of the thing is not necessarily altered because the thing itself has been damaged; wheat or rice may be damaged, but may still remain the things dealt with as wheat or rice in business. But if the nature of the thing is altered, and it becomes for business purposes something else, so that it is not dealt with by business people as the thing which it originally was, the question for determination is whether the thing insured, the original article of commerce has become a total loss. If it is changed in its nature by the perils of the sea as to become an unmerchantable thing, which no buyer would buy and no honest seller would sell, then there is a total loss.

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