« EdellinenJatka »
being given in evidence, be stamped after execution on payment of the penalty of £100. As a result of this modification of the law, the question has arisen, though it bas not been tried, whether a slip or covering note might not be legalized after its issue by being stamped. If such a form of agreement contain the essential requisites of a policy (p), there appears no reason why it should be incapable of being made a legal instrument in the way suggested.
(p) It is provided by 30 Vict. c. 23, s. 7, that "no contract or agreement for sca insurance shall be valid unless the same is expressed in a policy," and by
S. 4, that “the word 'policy' means any instrument whereby a contract or agreement for any sea insurance is made or entered into.”
THE ESSENTIALS OF THE CONTRACT.
1.—THE ESSENTIAL REQUISITES OF THE POLICY.
THE terms of the ordinary policy may be classified under three heads :—First, there are certain conditions common to all policies, without any one of which no such contract is complete; secondly, there are conditions, in general use, but not essential to the making of a complete instrument; and thirdly, there are special and occasional clauses which vary with the exigencies of each case. The following are the particulars which are essential to the making of a complete policy of marine insurance :
1st. The name of the assured or of his agent (a).
date of execution of the policy.
(a) Policies in blank are void at law under 28 Geo. III. c. 56.
(6) Except in the case of a floating policy, see Ch. I. s. 1.
(c) The consideration is, in English law, a necessary element besides the promise to create a contract by mere agreement; Leake on Contracts, p. 310. “In the case of mutual promises, there must be a reciprocity of
obligation ;” Chitty on Contracts, 6th ed., pp. 43, 44.
(d) It has been stated that it is not indispensably necessary that the sum insured should be specified in the policy, as an underwriter may bind himself to pay the value of the interest insured, or a given proportion of it, without defining the amount of his liability (Marshall on Insurance, 2nd ed., p. 336); but this course is never resorted to in practice, and would fail to satisfy the Revenue Laws, see below.
9th. The place where the policy is made (e). 10th. The stamp. It is provided, by the stamp laws (s), that "no contract or agreement for sea insurance (other than such insurance as is referred to in the fifty-fifth section of the Merchant Shipping Act Amendment Act, 1862) shall be valid, unless the same is expressed in a policy,” and also that “every policy shall specify the particular risk or adventure (g), the names of the subscribers, and the sum or sums insured ; and in case any of the abovementioned particulars shall be omitted in any policy, such policy shall be null and void to all intents and purposes” (h).
II.-THE PREMIUM. The two most material terms of the policy are the promise and the consideration, for these constitute the gist of the engagement entered into by the contracting parties. In the common form of policy, the covenant on the part of the underwriters to perform the obligations of the insurance is conjoined with an acknowledgment of the receipt of the premium, in the following words :
And so we the Assurers are contented, and do hereby
promise and bind ourselves, each one for his own Part, our Heirs, Executors, and Goods, to the Assured their Executors, Administrators, and Assigns, for the true Performance of the Premises, confessing ourselves paid the Consideration due unto us for this Assurance by the Assured
(e) It is expedient, if not necessary, that this should be inserted, as every mercantile contract is construed with reference to the usages of the place where it is made.
(f) 30 Vict. c. 23, s. 7.
(g) To specify the limits of the risk by periods of time, is a sufficient compliance with this requirement; Edwards
V. Aberayron Mutual Ship Insurance
(h) Under this section, it has been decided that policies issued by a Mutual Marine Insurance Association (neither incorporated nor registered), and signed by the managers on behalf of the members are invalid, such policies not specifying the names of the subscribers or underwriters as required by the Act; Re Arthur Average Association, 2 Asp. Mar. L. C. 530.
at and after the Rate of . In point of fact, the premium is seldom, if ever, paid when the policy is subscribed ; but, by the receipt clause it is allowed to have been paid from the moment of subscription, so as to preclude the underwriter from making any objection to fulfil his part of the contract upon the ground of want of consideration (i). It may appear at first sight to be a one-sided arrangement that the underwriter should be absolutely bound to his promise, while the payment of the premium, which is the consideration for the promise, should be taken for granted ; but the object of this arrangement will be recognized as we proceed to consider how the relation between the underwriter and the assured is affected when the insurance is made through the intervention of a broker. And it is to be remembered that the common form of policy is adapted to the system of private underwriting, in which the intervention of a broker is almost a necessary factor.
When a policy of insurance is effected by a broker, the direct relation between the assured and the underwriter is in a degree superseded; for the broker is responsible to the underwriter for the premium, although the underwriter is still liable to the assured for a loss, in the event of such happening. The relative positions of the three parties are, as follows :—the assured is debtor to the broker, and the broker to the underwriter for premiums; and the underwriter is debtor to the assured for losses (k).
It results from this arrangement that, as the assured is accountable only to the broker for the premium, the obligation which the underwriter assumes by insurance to protect the assured against loss ought not to be conditional upon the receipt of the premium, which is due to him from a third party, and
hence, the receipt clause is inserted. The insurance broker, in effect, purchases from the underwriter on behalf of the assured, a complete contract of insurance, and becomes directly responsible to the underwriter for the premium.
The underwriter is prevented by the receipt clause from claiming the premium from the assured direct, or seeking to set off unsettled premiums against losses ; he must look to the broker for his consideration, and the latter to the assured. In short, the underwriter is entirely debarred from claiming upon the assured direct; unless, indeed, the latter has acted fraudulently, or has connived at the commission of fraud by the broker, in the particular instance (1).
It is settled law that the insurance broker has a lien for the amount of the premium on every policy effected by him, whether for a principal, or for an agent. If one broker employs another to effect an insurance and divides the brokerage with the latter, the sub-agent has a lien for the premium paid by him to the underwriters, both as against the principal and the agent first employed, and is entitled to hold the policy until that lien is satisfied, though the premium has been paid by the assured to the first broker (m). Further, when the broker has been employed by the assured direct, he has a lien upon each policy in his possession for the general balance of his account with the latter.
In the event of loss, as we have already observed, the underwriter is liable direct to the assured, but the latter generally employs the broker to collect the claim, in which case, the mode of settlement is to some extent regulated by custom According to the usage of Lloyd's, which extensively prevails elsewhere,
(1) Ibid., 247.
(m) Fisher v. Smith, 4 Asp. Mar. L. C. 60. The following passage from Phillips (vol. ii., s. 1909) was cited with approval in the course of the judgments, both in the Court of Appeal and the House of Lords, as correctly setting forth the law on the point in question : "The agent who effects a policy for his principal, and advances the premium, or becomes responsible
for it, and retains the policy in his hands, has a lien upon it for his commission and the premium, until the same are paid to him or he is supplied with funds for the payment, whether his immediate employer is the assured himself or an intermediate agent; and in the latter case, whether the intermediate agency was known or not to the sub-agent claiming the lien.