Comparative analysis of charter party clauses versus marine insurance contractual terms: present legal status and future trends

Abstract

AbstractThis paper aims to classify and assess the impact of charter party clauses against the contractual terms of marine insurance contracts. Initially, a contractual term may be classified as a condition, a warranty, or an innominate term when the nature of a clause is not yet classified. Based on this classification, the effectiveness of those terms and the available remedies vary significantly upon a contractual dispute or termination. Specifically, the classification of a term as a condition has similar effects in charter parties and insurance contracts, namely, the termination of the contract and/or claim for damages. Nevertheless, the marine insurance conditions also rely on the claim’s seriousness to effectively provide the election of contractual termination, thus rendering them rather weakened compared to charter parties. At the same time, classifying a term as a warranty always had a different impact. The classification of a term as a warranty in a charter party may only offer as a remedy compensation for damages, but not the option to terminate the contract. In insurance contracts, the classification of a term as a warranty provides the same options to the affected party as a term classified as a condition, namely, the termination of the contract and/or claim for damages. With the introduction of MIA 2015, the affected party, when triggering a warranty, has a third option, namely, to be able to amend the contractual relationship in case reasons of termination emerge, protecting at the same time the other party, rendering it irresponsible of any damages or claims until the contractual relationship is reinstated.