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Terms of contract: condition, warranties, innominate terms

Warranty(Marine Insurance)
Last updated: 28-Nov-2015

Per Lord Goff of Chieveley in Bank of Nova Scotia v Hellenic Mutual War Risks Association (Bermuda) Ltd (The Good Luck), [1992] 1 AC 233:

…discharge of the insurer from liability is automatic and is not dependent upon any decision by the insurer to treat the contract or the insurance as at an end… As Lord Blackburn said in Thomson v Weems (1884) 9 App.Cas. 671, at p. 684:

In policies of marine insurance I think it is settled by authority that any statement of a fact bearing upon the risk introduced into the written policy is, by whatever words and in whatever place, to be construed as a warranty, and, prima facie, at least that the compliance with that warranty is a condition precedent to the attaching of the risk.

Once this is appreciated, it becomes readily understandable that, if a promissory warranty is not complied with, the insurer is discharged from liability as from the date of the breach of warranty, for the simple reason that fulfilment of the warranty is a condition precedent to the liability of the insurer.

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