A peculiarity of marine insurance, and insurance law generally, is the use of the terms
condition and warranty. In English law, a condition typically describes a part of the contract
that is fundamental to the performance of that contract, and, if breached, the non-breaching
party is entitled not only to claim damages but to terminate the contract on the basis that it has
been repudiated by the party in breach.
By contrast, a warranty is not fundamental to the performance of the contract and breach
of a warranty, while giving rise to a claim for damages, does not entitle the non-breaching party
to terminate the contract. The meaning of these terms is reversed in insurance law. Indeed, a
warranty if not strictly complied with will automatically discharge the insurer from further
liability under the contract of insurance. The assured has no defense to his breach, unless he
can prove that the insurer, by his conduct, has waived his right to invoke the breach, possibility
provided in section 34(3) of the Marine Insurance Act 1906 (MIA); (sec 36(3) Indian law).
Furthermore, in the absence of express warranties the MIA will imply them, notably a warranty
to provide a seaworthy vessel at the commencement of the voyage in a voyage policy (section
39(1); (sec 41(1) Indian law). and a warranty of legality of the insured voyage (section 41);
(sec 43 Indian law)
Difference between Condition and Warranty
| BASIS FOR COMPARISON | CONDITION | WARRANTY |
| Meaning | It is a stipulation which forms the very basis of the contract. | It is additional stipulation complementary to the main purpose of the contract. |
| Provision | Section 12(2) of the Sale of Goods Act, 1930 defines Condition. | Section 12(3) of the Sale of Goods Act, 1930 defines Condition. |
| Purpose | Condition is basic for the formulation of the contract. | It is a written guarantee for assuring the party. |
| Result of Breach of Contract | The whole contract may be treated as repudiated. | Only damages can be claimed in case of a breach. |
| Remedies available to the aggrieved party | Repudiation, as well as damages, can be claimed. | Only damages can be claimed. |
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