IMPLIED WARRANTIES

Alimarin, Ma. Regina

Dela Cruz, Ralf Owen
Kua, Harmaien
Loriega, Kate Colleen
Monsale, Karl Francis
Morante, Precious Hope

What is IMPLIED WARRANTIES?

Considered as natural elements of the contract of marine insurance. They are deemed part
of the contract even in the absence of contractual stipulations.

What are the kinds of Implied Warranties under the Insurance Code?

A. Warranty of Seaworthiness (Sec 114)

B. Warranty that the ship has the documents of neutrality or nationality (Sec 122)
C. Warranty against improper deviation (Sec 127 in relation to 126)
D. Warranty of legality of the voyage

SECTION 116. A ship is seaworthy when reasonably fit to perform the service & to
encounter the ordinary perils of the voyage contemplated by the parties to the policy.

SECTION 118. A warranty of seaworthiness extends not only to the condition of the
structure of the ship itself, but requires that it be properly laden, & provided w/ a
competent master, a sufficient number of competent officers & seamen, & the requisite
appurtenances & equipment, such as ballasts, cables & anchors, cordage & sails, food,
water, fuel & lights, & other necessary or proper stores & implements for the voyage.

What is warranty of Seaworthiness?

There is an implied warranty that the ship be seaworthy at the time of the voyage. Any
finding that the vessel is unseaworthy at the time of the voyage will preclude recovery from the
insurer. The insurer may still raise as a defense the fact of unseaworthiness of the vessel even if
such fact is unknown to the insured.

 Ship must be reasonably fit to perform service and must be able to encounter the
ordinary perils of the voyage. It is not limited to the physical structure of the vessel, but
must be laden with the proper equipment, machinery, crew members, and food for
passengers.
 Take into consideration: Nature of the ship, nature of the voyage, nature of the service
 IN THE ABSENCE OF ANY STIPULATION, ONLY THE PERILS OF THE SEA
IS INSURED, UNLESS “ALL-RISK POLICY” IS STIPULATED
o ALL-RISK POLICY – exempting clauses arte important; concealment will not
vitiate the contract except when such concealment is the cause of damage or loss.

NOTE: The ship does not have to be seaworthy at all times, it is enough that the ship is
seaworthy at the time of the voyage or at the time of the commencement of the risk (General
Rule Sec 117). Take into consideration these factors:
 a) Time Policy -the ship must be seaworthy at the beginning of each voyage
b) Voyage Policy -the ship must be seaworthy at the beginning of each stage of the voyage
c) Cargo Policy -the ship receiving the cargo must be seaworthy at the beginning of each
voyage

Is there an exception to the general rule?

Yes. Unreasonable delay on the part of the master in repairing the defects during the
voyage exonerates the insurer on ship or shipowner’s interest from liability from any loss arising
therefrom (Sec 120)

When is a ship considered seaworthy?

A ship is seaworthy if it is able to withstand the ordinary perils of the voyage as

contemplated in the policy and that it be properly laden, provided with a competent master, a
sufficient number of officers and seamen, and equipped with the requisite appurtenances and
equipment. (Secs 116 and 118)

NOTE: A ship which is seaworthy for the purpose of insurance upon the ship may yet be
unseaworthy for the purpose of insuring the cargo.

Can the Warranty of Seaworthiness be subject to a waiver?

Yes. The insurer waives the warranty of seaworthiness if it paid the insured the value of
the lost cargoes. But the waiver does not extend in cases of subrogation where the insurer may
still raise as a defense the unseaworthiness of the vessel when he exercise its right as a subrogee
against the party who is at fault.

What is warranted impliedly when the nationality or neutrality of a ship or cargo is

expressly warranted?

It is implied warranty under sec 122 of the insurance code that: (1) the vessel has the requisite
documents of nationality or neutrality if nationality or neutrality is expressly warranted; and (2)
the vessel will not carry documents that will create a suspicion on its nartionality or neutrality if
nationality or neutrality is expressly warranted.

What is warranty against improper deviation?

It must not deviate from the voyage. Deviation includes departing from the course of the
voyage, going on a completely different one or even an unreasonable delay in undertaking the
voyage

 Consider: Section 126. A deviation is proper:

a.) When caused by circumstances over which neither the master nor the owner of
the ship has any control;
b.) When necessary to comply with a warranty, or to avoid a peril, whether or not the
peril is insured against;
c.) When made in good faith, and upon reasonable grounds of belief in its necessity
to avoid a peril; or
d.) When made in good faith, for the purpose of saving human life or relieving
another vessel in distress.
What is warranty of legality of the voyage?

It has been a custom in marine insurance that adventure is lawful and shall be carried out
in a lawful manner. Even in the absence of provision in the Insurance Code, the warranty is
implied in the New Civil Code because a contract with an illegal object is void (Aquino,
2014,pp. 266-267).