the goods has passed to the buyer, he cannot reject them, but he may if sued for the price set up the warranty as a ground for reducing the same, or he may bring an action for damages.

§ 160. Authorities.—Chalmers's Digest of the Law of Sale contains a concise digest of the law. The well-known works of Lord Blackburn and Mr. Benjamin are standard treatises. The Law of Sale and Commercial Agency, by Mr. Campbell, will also be found useful.

CHAPTER IV

INSURANCE

§ 161. Definition. By a contract of insurance one person undertakes, in consideration of a payment called the premium, to indemnify another against some risk or to pay a sum of money on death to a man's representatives. The system of insurance has been so extended during recent years that there is scarcely any form of risk that cannot be insured. But the leading kinds of insurance are Marine Insurance, Life Insurance, and Fire Insurance. The document in which the contract of insurance is contained is called the policy; the party who undertakes the risk is called the insurer, or where he subscribes the policy, the underwriter; the party indemnified against the loss is called the insured or assured.

§ 162. Fire and Marine Insurance based on Indemnity. In a life insurance the insurer undertakes to pay a fixed sum on the death of the insured; but in fire and marine insurance, whatever sum be mentioned, the insurer is bound to make good the actual loss only, and under no circumstances is the insured entitled to a profit out of the loss. The result is that both parties have a common interest in the preservation of the thing insured. As a rule, the risks insured against are limited and defined in the instrument or policy embodying the terms of the contract. In some exceptional cases, i.e. in “valued policies," the value of the article is agreed, and such agreement is conclusive,

but otherwise the insured is only entitled to be reimbursed his actual loss.

§ 163. All material Facts must be disclosed.—Whatever be the kind of insurance, complete disclosure is required of all facts relating to the risk to be undertaken by the insurer. If any information be kept back that would have affected the insurer in undertaking the risk, the policy will be void. A concealment will have the same effect as a misrepresentation. The insured is, however, only bound to disclose that which he knows, and where he has no information on any point raised he should say so. Statements as to "belief" are not statements of facts, and in such a case the insurer takes the risk.

$ 164. The Insured must have an Interest in the Subject Matter.-Any person may insure, provided he have an "insurable interest" in the event insured against. As far as life insurance is concerned, a man may insure his own life, but he cannot insure the life of another unless such other person has a claim upon him for support enforceable by law.

In the case of fire insurance the insured must possess an insurable interest, both at the date of the policy and at the time the fire happens. As regards buildings, any one having an interest in the property can insure, but he can only retain out of the insurance moneys the value of his own interest. Common carriers, factors, brokers, wharfingers, pawnbrokers, and commission agents have an insurable interest in the goods in their possession.

The same rule holds as regards marine insurance.

§ 165. The Premium.-The money payment in consideration of which the insurer undertakes the risk is called the premium. It is the universal practice of insurers, except in the case of marine insurance, to stipulate that the contract shall not take effect until the premium has been paid. The premium may consist of a lump sum or of periodical payments. Where the premiums are payable yearly the insurance is from year to year; if they are paid half-yearly or quarterly the insurance is from half-year to half-year or from quarter to quarter. In the case of an

insurance extending over a number of years, a certain number of days, called days of grace, beyond the day fixed for the payment of premiums are allowed for payment.

Unless there is an agreement to the contrary, if a loss occur during these days of grace, the insured has no right of action on the policy. Strictly speaking, the premiums should be paid on the day appointed. Insurance companies, however, as a rule, provide that the policy shall be good and valid during the days of grace allowed.

It is a recognised rule that if the risk be not incurred the premium paid is recoverable, no risk, no premium. The risk is regarded as the consideration for the premium, and if it be not incurred, the consideration fails and the premium must be returned. On the other hand, if the risk once commences no portion of the premium is returnable.

MARINE INSURANCE

§ 166. Underwriting.—Marine insurance takes place where a ship or cargo or freight is insured against loss during a fixed time or between one port and another. The insurance is generally effected with individuals who are called underwriters, from the custom of the insurer entering into the contract by writing under or at the foot of the policy his name and the amount of risk he undertakes. A well-known association of underwriters is known by the name of Lloyd's. The members meet and carry on their business in rooms over the London Royal Exchange. Lloyd's underwriters individually sign their names at the foot of the policy, and opposite thereto the sum insured by each, in figures and also in words, with the date of so doing. This is called underwriting the policy for so much, and each underwriter thereby enters into a separate contract with the insured for the amount set opposite to his name. Underwriting is also undertaken by companies, the form of underwriting depending on the articles of association or other instrument constituting the company. A number of shipowners sometimes join together for the mutual insurance of their

respective vessels. Here there are no premiums, the losses in each year being made good by the members in proportion to the amount of ship property insured in the club. Insurance agents are often employed to negotiate a policy by both the insurer and the insured.

§ 167. What may be insured.-Not only may a ship or its cargo be insured, but also any special property in the same, such as the shipowner's interest in the freight. Freight is the price to be paid by a shipper of goods to the shipowner for the carriage of goods by ship. It is not due unless the goods are delivered at the port of destination. Many events might happen that would prevent such delivery, and in order to protect himself against possible loss the shipowner may insure. his expected. freight.

§ 168. Kinds of Policies.—The leading kinds of policies are valued and open policies, and time and voyage policies.

A valued policy is one in which the agreed value of the subject insured, as between the insured and the underwriter, is stated on the face of the policy. This value is conclusive, whether it be greater or less than the value in the open market. Ships and freights are generally insured in valued policies.

An open policy is one in which the value of the subject insured is not stated in the policy as between the insured and the underwriter, but is left to be proved by evidence in case of loss. Goods are generally insured by open policies, as their value can be ascertained by invoices, valuations, or other methods.

A voyage policy is one in which the risk is undertaken during a particular voyage between ports specified in the policy, e.g. from London to New York.

A time policy is one in which the risk is undertaken during a fixed time specified in the policy, e.g. from noon of the 1st January 1893 to noon of the 1st January 1894.

§ 169. The Slip and the Policy.-When a broker is requested to effect an insurance, he prepares a brief statement of the leading particulars of the risk to be insured. This statement, called the slip, is presented to the under

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