as would be applicable to his employers, who, by the general law of agency, are responsible for all actions performed by their deputy within the scope of his office.

In the first place, the law requires that the policy of marine insurance, in common with every other mercantile instrument, should be the outcome of a fair bargain between the parties. Fraudulent dealing at any stage of the transaction is fatal to the rights of the party responsible for it; for good faith lies at the root and permeates every branch of a legitimate contract (u). In accordance with this fundamental principle, the first thing which the person desirous of effecting an insurance has to do is to communicate to the underwriter all information material to the subject of which he may be specially cognizant, so that the latter may be enabled to form a just estimate of the nature of the risk proposed for his acceptance. It is not requisite for the person proposing the insurance to enter into details which are immaterial to the risk (x), or which the underwriter may be presumed to know; but, on the other hand, the mention of no material fact exclusively known to the former can be withheld from the latter, without prejudice to the insurance. There are certain conditions, which are never expressed either orally or in writing, but which are universally understood as essential to a valid insurance, such as that the vessel should be seaworthy at the commencement of the voyage, and that she should be navigated without undue delay or deviation from the ordinary course at any stage of the adventure.

When the underwriter is apprised of the full particulars of the risk, he either quotes the premium at which he will accept it or declines the risk. If a rate of premium is mutually agreed upon, the bargain is closed, and the terms of the insurance are either entered upon a "slip" which is initialed by the underwriter, or embodied in a "covering note"

(u) "By the law of merchants," said Lord Mansfield, "all dealings must be fair and honest, fraud infects and vitiates every mercantile contract." Pawson v. Watson; Park on Marine

Insurance, p. 224.

(x) The assured "is not bound to make a laborious disclosure of what is known to all "--per Lord Ellenborough, in Vallance v Dewar, 1 Camp. 503.

which is sent to the assured. Slips and covering notes are alike unstamped documents, having no legal validity, and useful only as furnishing a memorandum of the agreement which has been made pending the execution of the policy. If full particulars are to hand at the time of the effecting of the insurance, there is nothing to hinder the prompt execution of the policy; but there is frequently a delay in ascertaining the exact amount to be declared, or some other particulars, during which interval it is convenient that the insurance should be kept "on slip."

In the case of a provisional insurance on cargo, it is usual to state that, in case of loss or arrival before declaration, the interest is to be valued at invoice cost, with all shipping charges, and a specified percentage for profit added.

When the policy is executed, a copy is generally furnished to the assured, the original document being retained by the underwriter until the payment of the premium, when it is delivered or deliverable on application to the assured or his agent.

IV. THE COMMUNICATION OF MATERIAL

FACTS.

It is an implied condition of every contract of mariue insurance, that the person who proposes the risk for acceptance, whether principal or agent, shall communicate every material fact within his exclusive knowledge to the underwriter, unless the terms of the policy are such as to render the communication superfluous. There are two ways, in either of which it is possible for the assured to fail in this obligation, viz., (a) by the making of an erroneous statement upon some point material to the risk, i.e., misrepresentation (allegatio falsi); or (b), by the withholding of a material fact, i.e., concealment (suppressio veri). The breach of this implied condition, whether in the form of misrepresentation or concealment is fatal to the validity of the policy. "In all insurances," said Lord Mansfield, "it is essential to the contract, that the in

sured should represent the true state of the ship, to the best of his knowledge. On that information the underwriters engage" (y).

A representation, with respect to insurance, may be defined as an oral or written statement made by the assured or his agent, in proposing the risk for acceptance, whereby the underwriter is more readily induced to enter into the contract than he would otherwise have been (2).

A representation differs from an express warranty in this respect, viz., that the former does not appear in the written instrument, but the latter is always inserted in the policy. A statement which, if collateral to the policy, would only amount to a representation, acquires the force of a warranty if inserted in that instrument. It is immaterial whether an express warranty is inserted in the body, margin, or at the foot, but it must appear somewhere upon the face of the policy. An express declaration, written upon a paper which is folded within the policy at the time of subscription, does not amount to a warranty, neither does one which is gummed or wafered to the policy itself (a); but clauses, or other written papers, may be made a part of the written contract by a distinct reference to them in the policy (b). The distinction in form which has been noticed between an express warranty and a representation is accompanied by an important difference in effect. warranty, having the nature of a condition precedent, requires a strict and literal fulfilment; but a representation, being collateral to the written contract, is satisfied by a substantial compliance with its terms. For instance, to refer to an old case which is generally cited as typical upon this point—a broker, in offering a risk to the underwriter, showed the latter his written instructions, which comprised a statement respecting the vessel that "she mounts twelve guns and twenty men.' In point of fact, the vessel had not this precise force on board, but she had an armament of guns and swivels, with a crew of (a) See Park on Insurance, pp. 365, 366.

(y) Fillis v. Brutton, at N. P.; Park on Insurance, p. 182.

(2) See Arnould on Insurance, 4th ed., p. 476.

A

(b) See Phillips on Insurance, 4th ed., s. 70.

C

men and boys, which in both particulars were equivalent to though not identical with the force specified; and it was held that the statement made to the underwriter, being a representation, was satisfied by the substantial fulfilment, though, had it been a warranty, nothing less than a strict and literal fulfilment would have sufficed (c).

Representations are divisible into two classes; viz., first, such as are positive in their nature; and secondly, such as are merely indicative of expectation or opinion (d). Statements of the first class, if material to the risk, require a substantial fulfilment, in default of which the policy will be avoided; but those of the second, being more or less conjectural, may be unfulfilled, without detracting from the validity of the contract. This is especially the case where the word "expected" is used; as, for example, where a broker, in proposing an insurance upon certain vessels engaged in the African trade, stated that they were "expected to leave the coast of Africa in November or December," when in fact they had all left in May; it was held that this statement, having been made without the intent to deceive, though material to the risk, was a mere expression of opinion, into the grounds of which the underwriter should have inquired before relying upon it (e). A representation may be positive in form, yet if it emanate from a party who could not be expected to speak with authority upon the subject, as in the case of an owner of goods anticipating the date of the ship's sailing, such a statement will be construed as a mere expression of opinion, the incorrectness of which would not affect the validity of the contract (ƒ). Of course, if it can be shown that a statement was made with the knowledge that it was fictitious for the purpose of inducing the underwriter to take the risk, the policy will be avoided upon the ground of moral fraud, in whatever form the representation may have been couched (g); as, where an agent, in effecting an insurance

(c) Pawson v. Watson; see Park on Insurance, pp. 222-228.

(d) See Arnould on Insurance, 4th ed., p. 476.

(e) Barber v. Fletcher, 1 Dougl. 306.

see

(f) Bowden V. Vaughan; Arnould on Insurance, 4th ed., p. 488. (g) See Arnould on Insurance, 4th ed., pp. 481, 497.

from Jamaica to London, informed the underwriter that the ship had sailed at the end of December, though he was cognizant of the fact that she had sailed on the 24th of November, on which it was held that the policy was avoided upon the ground of fraud (h). If the policy be vitiated by a misrepresentation, without moral fraud, the assured will be entitled to a return of the premium; but no such return will be claimable, if the representation were not only erroneous, but made with the intention to deceive (i).

As the binding effect of a representation honestly made depends upon its materiality, it is important to ascertain what is implied by that condition. A representation is deemed material, if it communicate "any fact or circumstance, the belief of which may be reasonably supposed to influence the judgment of the underwriters in undertaking the risk, or calculating the premium" (k).

Concealment, with respect to insurance, is the non-disclosure of a material fact lying exclusively within the knowledge of one of the parties, and which the other is not bound or presumed to know. "Good faith," said Lord Mansfield, "forbids either party, by concealing what he knows, to draw the other into a bargain, from his ignorance of the fact and his believing the contrary. The facts lie most commonly in the knowledge of the assured only; the underwriter trusts to his representation, and proceeds upon confidence, that he does not keep back any circumstance to mislead him, and induce him to estimate the risk as if it did not exist. The keeping back such circumstance is a fraud, and although the suppression should happen through mistake, the policy is void because the risk is different from that understood and intended to be run" (l). The concealment of a material fact will equally avoid the policy,

(h) Roberts v. Fonnereau; Park on Insurance, p. 196.

(i) For the cases, see Arnould on Insurance, 4th ed., p. 482.

(k) Marshall on Insurance, p. 450. (1) Carter v. Boehm, 3 Burr. 1909, 1910. Strictly speaking, the contract

is not absolutely void by concealment, but it is optional with the party against whom the concealment is made to treat it as void, provided he make his elec tion within a reasonable time. See Morrison v. Universal Marine Insur ance Co., L. R. 8 Ex. 40, 197.