A Critical Evaluation of Warranties in Insurance Law - Essay Example

A Critical Evaluation of Warranties in Insurance Law A Critical Evaluation of Warranties in Insurance Law Warranties have been thesubject of wide criticism in insurance law due to the harsh consequences of non-compliance their bear for policyholders. According to section 33 (3) of the Marine Insurance Act 1906 (MIA), warranties must be fully complied with regardless of their relevance to the insured risk (Evald, 2012). This dictation by the MIA seems obstinate and inconsiderate of many issues that surround the insurance process. According to Rose (2012), warranties have portrayed insurance law in a bad light because of the consequences that are suffered by policyholders if and when they fail to comply with them. Rose (2012) observes that warranties have become an attractive subject of criticism in insurance law by many stakeholders. According to Thomas (2009), the main contentious issue that makes warranties especially distasteful is contained in the latter part of MIA section 33 (3). According to Bennett (2006), this section ends with an admonition that if the policyholder breaches a warranty, then the insurer is legally and rightfully discharged from liability; this takes effect from the date of the breach of warranty. MIA section 34(2) adds that once the warranty is breached the policyholder cannot claim liability on the basis of remedying the warranty before incurring the actual loss (Thomas, 2009). This clause eliminates any hope of liability once the warranty is broken or breached (Bennett, 2006). According to Gilman, Merkin, Blanchard, and Templeman (2013), these clauses seem to favor insurers in a big way. Many scholars and other legal contributions have advocated remedies and improvements to the insurance law to enhance a balanced and favorable law that caters for both the policyholders and the insurers in a befitting manner (Rose, 2012). In order to understand the underlying constraints and issues surrounding warranties in insurance law, it is essential to evaluate warranties objectively. Warranties occur both in marine insurance and consumer insurance (Hudson, Madge & Sturges, 2013). However, consumer insurance contains statutory and regulatory safeguards which are all aimed at regulating the consumer insurance sector (Harris, 2000). These include; the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs), the Financial Services Authority rules, the Consumer Insurance (Disclosure and Representations) Act 2012 and also the Financial Ombudsman Service (Harris, 2000). Bennett (2006) observes that marine insurance does not have any safeguards and hence has been the subject of criticism due to the effects of warranties in its constitution. This paper tackles warranties in marine insurance by explaining their meaning, applications, types, criticisms and preferable improvements in a bid to make them effective in insurance law. Insurance Contracts Insurance contracts contain a set of defined rules and guidelines which govern the insurance policy. According to Thomas (2009), these rules and guidelines dictate the successful engagement between the insurer and the policyholder. Insurance contracts use conditions and warranties to spell out their guidelines and rules more effectively and emphatically (Harris, 2000; Soyer, 2001). However, due to the complicated nature of insurance settings and undertakings and also due to other underlying occurrences some of these contractual obligations require further interpretations to validate claims and liability (Rose, 2012; Thomas, 2009). Harris (2000) asserts that in order to understand the basis of insurance contracts, it is important to consider their composition. Warranties Warranties offer a rich body of study due to their inherent association with insurance law (Merkin, 2010). In order to shed sufficient insight to the preceding evaluation, it is important to understand the meaning of warranties in insurance law. It is important to note that warranties exist in both general law of contract and also in the general law of insurance and that they are mainly composed of conditions (Merkin, 2010). A condition refers to the fundamental term in the contract that must be fulfilled by one party (policyholder), so that the other party fulfills its duties or liabilities (insurer). According to Bennett (2006), a warranty is a condition provided, stated or implied in the insurance policy or contract (express warranties). This condition must be fully complied with to guarantee the successful completion of the insurance engagement (successful completion refers to payment of compensation after claim validation to the policyholder by the insurer respectively, in case of loss). This condition has to be complied with or fulfilled regardless of its effect on the risk (Evald, 2012). In insurance law, the MIA 1906 which is a codification of the English Common Law acts as the global guideline, therefore, the references in this paper regarding insurance law are based on it unless stated otherwise (Evald, 2012; Harris, 2000). Sections 33-41 of the MIA 1906 address the issue of warranties and in this context they are referred to as promissory warranties. According to this section, a promissory warranty is a type of warranty where the policyholder undertakes that a specific activity shall or shall not be carried out, or that he or she will fulfill a particular condition; this involves confirming or denying the existence of a given set of facts (Bennett, 2006; Merkin, 2010). A promissory warranty stipulates an undertaking or a duty for the policyholder; this undertaking is particularly vital to the insurance contract that if he or she fails to fulfill it then the insurer is no longer liable for the risk insured against (Harris, 2000; Liang-yi, & Jia, 2010). There are two types of warranties in marine insurance law, namely; express warranties and implied warranties. Express Warranties According to section 35 of MIA 1906, express warranties refer to any word composition drawn to infer warranty between the policy holder and the insurer (Kessler & Fine, 1964). They must be written on the face or in the margin of the policy, or they may be incorporated into the policy through reference (Evald, 2012; Thomas, 2009). Thomas (2009) notes that they are effectually inferior to implied warranties, but they can be used to complement or add to them. According to Merkin (2010), express warranties are used to cover or define certain events or circumstances that can impact the risk insured against. There are many types of express warranties depending on the contractual basis of the insurance policy (Soyer, 2001). Some examples of express warranties are discussed below. Nationality express warranties These are express warranties that define the nationality composition of a particular vessel. The warranty can stipulate that the crew, the master, certain members of the crew, certain officials of the vessel or the ship itself should be from a certain country or nationality (Evald, 2012). According to Gilman et al., (2013), express warranties are used to complement other implied warranties contained in the MIA because the MIA lacks an implied warranty of nationality for a vessel. Express warranties of nationality are used in order to ensure that the ship and or its crew comply with the laws of a specific jurisdiction. Evald (2012) suggests that the name of the vessel represents its nationality in most cases such as a Canadian ship. However, the nationality of a vessel is usually determined based on the nationality of its owners and not the country of registration (Liang-yi, & Jia, 2010). Navigation express warranties These are express warranties restricting the navigation operations of the insured vessel (Evald, 2012; Kessler & Fine, 1964). They are either geographically defined or operationally defined. Geographical restrictions restrict the navigation of the vessel to certain geographical locations while operations restrictions control the vessel’s activities such as towage (Liang-yi & Jia, 2010). Time definitions often accompany geographical restrictions such as, the ship may not sail in certain areas during winter (Harris, 2000). Survey express warranties. These are used to complement the implied warranty of seaworthiness, and they are meant to enhance the level of seaworthiness of the insured vessel (Evald, 2012). The insurer demands that the policyholder conducts surveys of the ship’s condition either before risk attachment or routine surveys on the insured vessel (Bennett, 2006; Evald, 2012). Evald (2012) suggests that these surveys are beneficial to both parties in the contract because they reduce the risk of misconception and also eliminate the risk of the time policy which is based on the policyholder’s knowledge of the vessel’s seaworthiness (Vance, 1911). It is important to note that these surveys are carried out at the policyholders’ expense. Implied Warranties In marine insurance, there are statutory, contractual conditions of operation that constitute implied warranties (Langhauser, 1987). According to Evald (2012), implied warranties are different from express warranties in that they are part of every insurance contract whether they are mentioned in the policy or not. Implied warranties do not require the consent of any or both the parties in the contract in order to make them effective in the contract (Langhauser, 1987; Soyer, 2001). According to Liang-yi and Jia (2010), they override express warranties by virtue of law, jurisdiction and application. There are four types of implied warranties according to the MIA 1906. Implied warranty of seaworthiness This is the most important implied contract, and it appears in two types of policies (Langhauser, 1987). The implied warranties of seaworthiness are concerned with the voyage operations of the policyholder ranging from the time at sea to the vessel’s suitability (Ryrberg, 2012). In voyage policies According to section 39 (1) of the MIA 1906, the voyage policy contains an implied warranty that the ship is seaworthy at the start of the seaworthy for the purpose of the specific endeavor insured (Vance, 1911). Seaworthiness is described in the section as the ship’s condition of being reasonably fit in all aspects to enable it to manage ordinary sea problems (Langhauser, 1987). According to Langhauser (1987), this section covers many aspects which must be assessed to verify the ship’s condition as reasonably fit. They include the ship’s machinery, equipment, and navigational aids, sufficiency and quality of fuel, stability and stowage of cargoes and also the sufficiency and competence of the ship’s crew (Gilman et al., 2013). All these factors must be assessed to ascertain that the ship is reasonably fit for the voyage at the start of the voyage (Ryrberg, 2012). In time policies The MIA 1906 states in section 39 (5) that there is no implied warranty in the time policy demanding seaworthiness of the ship at any stage during the voyage or adventure. The section also stipulates that if the assured goes to sea in an unseaworthy ship knowingly then the insurer’s liability is waivered (Evald, 2012; Kessler & Fine,1964; Vance, 1911). This policy demands that the insured undertakes the voyage with knowledge and consent of the unseaworthiness of the ship covered by the insurer (Langhauser, 1987). This policy also demands a causation link between the unseaworthiness of the ship and the actual loss (Soyer, 2001; Vance, 1911). Implied warranty of legality This is a statutory implied warranty dictating lawfulness in the voyage (Liang-yi, & Jia, 2010). Section 41 states that there is an implied warranty that the insured adventure is lawful and also that the insured is able and will control the adventure to ensure it is lawful from the beginning to the conclusion (Gauci, 1995; Kessler & Fine, 1964). This warranty covers both the legality of the adventure and the performance of the adventure (Hodges, 2013). Implied warranty of portworthiness This implied warranty is concerned with the ship’s condition at the port (Vance, 1911). Section 39 (2) alleges that there is an implied warranty that the ship should be reasonably fit to face the port’s ordinary perils at the start of the risk (Hodges, 2013). This warranty applies in a policy which attaches while the ship is docked at the port including all voyage policies whether on the cargo, ship or freight (Arnould, 1909; Soyer, 2001). Implied warranty of cargoworthiness This warranty is implied on goods and other moveables in a voyage policy. According to section 40 (2), there is an implied warranty that the ship which carries the cargo is seaworthy at the start of the adventure and reasonably fit to carry the goods and other moveables from the departure point to the destination covered in the policy (Merkin, 2010; Thomas, 2009). This provision has been deemed inapplicable and has been replaced by suitable provisions that consider the priviness of the insured regarding the ship’s condition at the commencement of the voyage (Gilman et al., 2013). It has been replaced by suitable provisions like the Unseaworthiness and Unfitness exclusion clause which is contained in the Institute Cargo Clauses (Ryrberg, 2012; Hodges, 2013). Contentious Issues in Warranties Compliance Section 33 (3) of the MIA 1906 demands total compliance by a policyholder with warranties regardless of their effect on the risk (Liang-yi, & Jia, 2010). According to Bennett (2006), this provision is one of the contentious provisions that have subjected warranties to wide criticism. This is because the provision demands strict compliance with the warranty and also excludes consideration of the warranty’s effect on the risk incurred (Vance, 1911). Several cases have been witnessed in which exact compliance formed the only basis of liability determination (Rose, 2012). An example of such a case can be used in order to portray the relevance of this clause in liability qualification. The De Hahn v Hartley case involved a ship which was warranted to sail with a crew of 50 members (Hodges, 2013). However, the ship sailed with only 46 crew members but picked six more after the first leg of the adventure. The ship suffered loss later on in the voyage, but the court dismissed liability claims on the basis of warranty of seaworthiness breach. Another example was in Overseas Commodities Ltd v Style case which involved an express warranty regarding cargo marking (Gauci, 1995). In this case, part of the cargo was not properly marked but the court discharged the insurer from liability for the whole load. Logically, the court should have exempted the liability for the cargo that was not properly marked (Liang-yi, & Jia, 2010). Although the court noted that the ship only breached part of the warranty, the insurer was fully discharged from liability (Gauci, 1995). There are instances when the exact compliance provision favors the insured although they are relatively few. In the Svenska Handelsbanken v Sun Alliance and London Insurance plc, which is an example of a general insurance case, the contract contained an express warranty that demanded the policyholder to conduct some investigations regarding relevant business associations (Hodges, 2013). The judge considered this provision to be a varied warranty but insinuated that although the insured was mandated to carry out the investigations it could only do so to a certain level of awareness (Thomas, 2009). The judge noted that the insured conducted the investigations to the limit of its power as the clause stipulated, but it could not anticipate all the circumstances that would arise during the investigations (Devlin, 1966; Hodges, 2013). Thereby, the judge decided that although the express warranty held, the insurer had not bleached it because it had only done what it could, and the clause did not impose additional obligations to the insured (Gilman et al., 2013). In the Blackhurst v Cockell case, the court decided that if a ship is presumed safe on a specific day then it is consequently true that the ship is safe at any other time during that specific day. That is if the ship is fine at 6 a.m. then it is lost at midday the same day, it means that the warranty has not been breached. This case was later included in section 38 of the MIA 1906, and it illustrated a weakness in the English courts concerning a warranty’s effectiveness as a continuing obligation (Liang-yi & Jia, 2010). Exact compliance liability cases require extensive interpretation of the warranties described in the contract, with emphasis on the intended meaning between the contract parties during the drafting of the contract (Rose, 2012). In Sea Insurance Co v Blogg the court was tasked with the meaning or definition of the word “sail” as it was used in the insurance contract (Hodges, 2012; Soyer, 2001). The court decided that in that particular context, the word was referring to ship’s movement with the intention of starting the insured voyage which presumably presented great risk to the vessel (Ryrberg, 2012). They dismissed other movements by the ship such as movements close to or within the port (Ryrberg, 2012). The judges decided that sailing in the contract referred to the movement of the ship from the port with the intention of commencing the insured voyage (Jerry & Richmond, 2012). The court decided that the warranty was not breached by the movement of the ship for a distance of 500m away from the port and then anchoring; which was done to prevent the crew for getting drunk on the port (Devlin, 1966; Ryrberg, 2012; Soyer, 2001). Exact compliance also considers the strict adherence of the provisions within the required time. An interesting example of this illustration is in the Forshaw v Chabert case, where the implied warranty of seaworthiness was breached (Hodges, 2012). The warranty specified that the ship sailing from Cuba to England had a continuing obligation to sail with 10-crew members. However, two members of the crew left the ship in Jamaica because they had not signed for the whole trip. Although the ship picked two replacements after dropping the other two, the warranty was considered breached, and the liability was discharged (Hodges, 2013). This was because the ship had not signed the whole crew at the start of the voyage as stipulated by the warranty. “Basis of the contract” clause According to Rose (2012), this is one of the most contentious issues in warranties because it appears as a tool to hoodwink policyholders. The basis of the contract clause is included at the end of the contract or proposal, and it requires that the insured accepts that the answers he or she provides in the proposal form the basis of the contract (Gauci, 1995). According to Merkin (2010), many policyholders accept this provision in good faith and sign the clause without realizing the legal repercussions it bears. The insured’s declarations are converted into warranties in the insurance contract after signing the clause (Thomas, 2009). Many critics of this provision view these clauses as traps that are designed by insurers to refute claims and deny responsibility based on innocent and irrelevant mistakes by policyholders (Gilman et al., 2013). Proponents of this provision argue that the clause promotes the principle of utmost good faith by enhancing honest disclosure by the policyholders. The main distressful issue regarding this provision is its inherent protections to the insurer. Part 2, section 20 of the MIA 1906 advocates for truthful policy declarations, it permits insurers to reject policies that contain false statements (Gauci, 1995). The section provides safeguards which dictate that the insurer must consider the untrue declarations to assess their material relevance to the risk (Bennett, 2006; Merkin, 2010). The insurer should also consider if the policyholder had based the policy acquisition on the untrue declarations (Hodges, 2013). In contrast, when the basis of the contract clause is used by the insurer in a breach of warranty allegation, the declarations are not considered on the basis of their material relevance to the risk and liability is discharged for any mistake in the clause (Jerry & Richmond, 2012). The Unipac (Scotland) Ltd v Aegon Insurance Co (UK) Ltd case presented an example of the exploitation of this provision by an insurer. The proposal form was signed to accept that all the answers in the proposal were true and hence would form the basis of the contract (Hodges, 2012). Unfortunately, the policyholder had made two minor mistakes that were considerably immaterial to the risk experienced. The insurer referred to the proposal and although the policyholder insisted that it had answered the questions truthfully, the liability was discharged (Hodges, 2012). The court argued that the case was based solely on the contact wording which was very clear regarding the contractual bearing of the proposal answers. Materiality The principle of materiality refers to the relationship between the warranty and the insured risk. In promissory warranties, the materiality of the warranty does not affect the effects of the warranty (Jerry & Richmond, 2012; Soyer, 2001). This provision has been criticized as being illogical and unreasonable (Rose, 2012). However, according to the proponents of insurance law, it promotes the principle of utmost good faith and reflects the aimed purpose and objective of warranties (Gilman et al., 2013). According to Bennett (2006), this provision dictates that the obligations constituted in the insurance contract must not be altered or broken throughout the insurance period except in cases where the insurer offers other alternatives. Gauci (1995) argues that although the general view is that warranties are unreasonable because they do not have to be material to the risk, they are useful to both parties in an insurance contract. For example, a warranty serves to ensure that the risk insured is equal to the actual risk throughout the insurance period (Hodges, 2013). Thomas (2009) argues that although this may appear to benefit only the insurer, the policyholder benefits because the premium rate is fairly set. In the case of express warranties of surveys, the insured proves the seaworthiness of his vessel hence depicting the relatively low risk level of his vessel and this result in low premiums (Merkin, 2010). Causation Merkin (2010) suggests that causation is another contentious issue in warranties that has become a subject of widespread criticism. The relationship between the breach of warranty and the causation of the risk for the loss claimed does not have to be proven by an insurer in order to discharge him from liability (Gilman et al., 2013). An example to illustrate this concept is; a ship is warranted to have a crew of 10 members all of Canadian nationalities. The ship suffers loss due to bad weather for the insured risk and during the incident it has 5 Canadian nationals and 5 British nationals as its crew. The insurer will most certainly be discharged from liability regardless of the fact that the crew composition had no causal link to the risk insured, or the loss incurred (Ryrberg, 2012). Breach The term breach refers to the failure of the insured to abide, comply or fulfill the warranties included in an insurance contract. The breach results in automatic discharge of liability by an insurer according to the MIA 1906; with effect from the date of the breach (Arnould, 1909; Devlin, 1966). Rose (2012) observes that warranty breaches have been the subject of intense debate and criticism both in implied and express warranties. According to Gauci (1995), the main contentious issue regarding the breach of a contract is based on the automatic discharge of liability for the party offended by the breach. The most notable case regarding the breach of warranties and the subsequent automatic discharge from liability is The Good Luck Case (Devlin, 1966; Hodges, 2012). In this case, the House of Lords insisted that a promissory warranty was a condition precedent to the insurer’s liability according to section 33 (3) of the MIA 1906 (Hudson et al., 2013). The insurer had argued that discharge of liability was not automatic, but constituted a right for the offended party to accept a breach and hence discharging him from liability (Hodges, 2013). The English House of Lords indicated that a breach to a promissory warranty did not require any further action from the insurer based on the fact that the offended party was off risk from the date of the breach (Hodges, 2012). This decision meant that any breach to a promissory warranty always constituted a repudiatory breach which resulted in automatic discharge of liability for the offended party (Hudson et al., 2013). Section 34 (1) of the MIA 1906 offers a few exceptions which can be used to excuse or defend a warranty breach (Jerry & Richmond, 2012). They include when a warranty becomes unlawful because of subsequent circumstances and also when the warranty becomes void or inapplicable because of the circumstances involving or surrounding a contract (Devlin, 1966). The result of a breach occurs under three categories of applications in warranties, namely: conditions precedent to the attachment of risk, conditions precedent to liability and subsequent conditions (Gauci, 1995). In all these occurrences, the result of a breach is inherently uniform as it means the insurer avoids liability which refers to a repudiatory breach (Hudson et al., 2013). In some cases, a repudiatory breach can be severe to the extent of blatantly prejudicing the insurer, in which case the insurer can seek compensation for damages incurred (Gauci, 1995). A breach is further criticized due to the rigidity of insurance law regarding its occurrence and remedy (Rose, 2012). According to marine insurance law, a breach cannot be cured or remedied; that is once a breach is declared even if the party involved remedies the circumstances causing the breach there is no effect on the repercussions (Arnould, 1909; Jerry & Richmond, 2012; Thomas, 2009). There is no other defense for breach of warranty except the two instances provided by the MIA 1906, and this is based on the law’s doctrine on promissory warranties regarding materiality and causality (Devlin, 1966). The court’s interpretation of this may however pose an interesting discussion regarding the necessary extent of compliance for the warranty to be breached. In Laing v Glover, the ship started the voyage in a convoy as demanded by the contract but completed the voyage without being a part of a convoy (Hodges, 2012). The court decided that the initial compliance with the warranty was enough, and hence the warranty was not breached and liability could not be discharged (Hudson et al., 2013). The basis of the main criticism was the fact that although the vessel fulfilled the initial warranty, the remainder of the journey increased the risk, and hence its failure to fulfill the second part represented a breach of warranty (Jerry & Richmond, 2012). A warranty breach is further indicated by court cases to mean the actual alteration of the warranty and not the intention to do so or the indication that a breach could occur (Devlin, 1966). In Simpson Steamship Co v Premier Underwriting Association Ltd, the ship had a navigation express warranty that demanded it should not sail in any area east of Singapore (Hodges, 2012). However, the court decided that the ship had not breached the warranty despite the fact that it was lost when sailing towards a place east of Singapore (Hodges, 2012). In Baines v Holland, the ship was warranted to start the second leg of its adventure on a specific date in Quebec (Hodges, 2012). The ship failed to fulfill the set date after encountering insured problems in the first voyage. The insurer argued that the warranty was broken because the ship started the first voyage late and hence could not fulfill the set time for the second leg of the voyage (Hodges, 2012). The court dismissed this argument and held that the warranty was fulfilled. Waiver This provision states that an insurer can waive a warranty breach for the policyholder (Hudson et al., 2013). According to Thomas (2009), this provision seems to contradict the earlier provision of automatic discharge from liability for the insurer (Jerry & Richmond, 2012). However, this provision is considered as an equitable estoppels by the courts which is undertaken voluntarily by the insurer (Hudson et al., 2013). Other clauses as warranties There are other clauses in an insurance contract that are interpreted as warranties (Hudson et al., 2013). In most cases, clauses that are considered as warranties are usually used in the contract to describe the insured property. In Baring v Clagett, a clause in the contract described the ship carrying the cargo as “an American Vessel”; according to the court, this inferred the ship’s nationality (Hodges, 2012). Suspensive clauses are also considered as warranties in an insurance contract. They define a warranty provision that results in a temporary suspension of liability rather than total discharge for the insurer (Gilman et al., 2013). Suspensive clauses are mainly dependent on the interpretation of the courts in order to merit their implications (Devlin, 1966). For example, in The Bancell II case, the court decided that the warranty for a ship to have a night watchman was suspensive to the time defined (Hodges, 2012). The court held that liability could not be discharged because the breach was not the immediate cause of the loss incurred (Jerry & Richmond, 2012). Conclusion Warranties have become the subject of criticism due to the harsh repercussions that arise from non-compliance (Ryrberg, 2012). In order to alleviate the problems associated with warranties, the construction and interpretation of warranties should be objective to both parties in an insurance contract (Jerry & Richmond, 2012). According to Thomas (2009), this demands the full consideration of the contract text and wording, the circumstances surrounding its inception, relevant and related business practices and also the subsequent engagements of the parties involved. The first consideration is the warranty construction to decide whether it is truly a valid warranty or not (Arnould, 1909). In order for a provision in the contract to be considered as a warranty, the wording must be clear to that effect and it should be noted that using the word “warranty” is not enough to make the statement a warranty (Ryrberg, 2012). The next task concerns the interpretation of the warranty. According to Rose (2012), the court must decide the exact demands stipulated in the warranty by defining the obligations set by the parties involved in the contract. According to Arnould (1909), this is the most important task in ensuring the effectiveness of warranties to all parties involved. According to Hudson et al. (2013), if the warranty is worded clearly, the court derives the literal meaning from the text but in other cases the court has to interpret the warranty depending on the context and also on other factors relevant to the construction (Jerry & Richmond, 2012). In considering the construction of a warranty, the court must consider the intended purpose of the warranty. For example, in Pratt v Aigaion Insurance Co SA, the warranty demanded that at least an experienced captain or the owner of the ship had to be abode the ship “at all times” (Hodges, 2012). The court interpreted this clause to apply only when the ship was at sea. Finally, the courts should consider the interests of the parties constructing an insurance contract. It is a common practice for insurers to include a “warranted uninsured” clause in the contract to ensure that the insured takes appropriate care for the insured property (Hudson et al., 2013; Thomas, 2009). This clause dictates that the policyholder must take full cover for the vessel and not for specified parts, such s a quarter of the vessel. In such a case, the court should base the case on the agreed value of the insured property and not on the actual value (Jerry & Richmond, 2012; Ryrberg, 2012). References Arnould, J. (1909). Arnould on the Law of Marine Insurance and Average (Vol. 1). Stevens and sons. Retrieved from https://archive.org/stream/cu31924022366714/cu31924022366714_djvu.txt para.710 Bennett, H. (2006). Law of Marine Insurance 2nd Edition. Oxford University Press. Oxford Devlin, L. (1966). The treatment of breach of contract. The Cambridge Law Journal, 24(02), 192-215. Evald, K. (2012). Express Warranties in Marine Insurance: A Comparative Study of English and Norwegian Law. http://lup.lub.lu.se/luur/download?func=downloadFile&recordOId=2701830&fileOId=2701831 Harris, R. (2000). Industrializing English Law. Entrepreneurship and business organization. 1720–1844. 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