Civil Code of Québec, 1991

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Certain insurable interests can be covered by marine insurance.

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This section says when an insurable interest exists for several people, including insurers, insured persons, ship crew, freight advanceors, buyers of goods, and hypothecary debtors and creditors.

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A person with an interest in insured property may buy insurance for themselves or for a third person with an interest in that property.

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The owner of insurable property has an insurable interest in the property's full value, even if a third person has agreed or is liable to indemnify the owner for loss.

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The provision defines insurable value as the amount at risk for the insured when the contract is formed, and says it includes insurance charges on the property.

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This section defines how to calculate insurable value for ship, freight, and goods insurance.

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2520. The subscription of each insurer constitutes a distinct contract with the insured. 1991, c. 64, a. 2520.

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A contract may be for a voyage or a period of time, and it may also be valued, unvalued, or floating.

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A voyage contract insures the insured from one place to another or more places, and may also cover the place of departure if the contract says so. A time contract insures the insured for the specified period.

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A valued contract sets the agreed value of the insured property.

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This section defines an unvalued insurance contract and says a contract is treated that way if the insured value is declared only after notice of loss or arrival, unless the policy says otherwise.

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A floating contract is an insurance contract stated in general terms, with details to be set later by declaration.

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Declarations may be made by endorsement on the policy or in another customary manner; if they concern goods to be dispatched or shipped, they must be made in shipment order, state the goods’ value, and cover all consignments unless the policy says otherwise.

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A marine insurance policy must state the insured property, the insured risk, the sums insured, the voyage or period covered, the subscription date and place, the premium amount or rate, and when premiums are due.

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A marine policy may be assigned before or after a loss, and by endorsement on the policy or another customary method.

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If the insured has alienated or lost an interest in the insured property, the insured may not later assign the policy unless an assignment was agreed to before or at that time.

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Selling or otherwise alienating the insured property does not, by itself, transfer the insurance.

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The assignee may enforce rights directly against the insurer, and the insurer may raise any defense arising from the contract that it could have raised against the insured.

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2532. A contract is inadmissible in evidence unless it is embodied in an insurance policy, but once the policy has been issued, customary memorandums of the contract such as the slip or covering note are admissible in evidence, in

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A person may ratify a contract made in good faith on behalf of a third person, even after learning of a loss.

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The insurer does not have to issue the policy until the premium is paid or tendered.

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If an insurance premium was left to be arranged and no arrangement is made, a reasonable premium must be paid.

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If a broker effects a marine policy on behalf of the insured, the broker is responsible to the insurer for the premium; otherwise, the insured is responsible.

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The insurer is responsible to the insured for amounts payable, including when there is a loss or a return of premium.

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If the consideration for an insurance premium totally fails, the premium is returnable to the insured, so long as there was no fraud or illegality by the insured.

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If a policy is null or cancelled by the insurer before the risk begins, the premium is returnable unless there was fraud or illegality by the insured; if the risk is not apportionable and has attached, the premium is not returnable.

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2540. Where the insured property, or part thereof, has never been imperilled, the premium, or a proportionate part thereof, is returnable. Where the property has been insured “lost or not lost” and has arrived in safety at the time when

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2541. Where the insured has no insurable interest throughout the currency of the risk, the premium is returnable, provided the contract was not effected by way of gaming or wagering. Where the insured has an interest subject to annulment

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If the insured is over-insured under an unvalued contract, a proportionate part of the premium is returnable.

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A broker may retain the policy for the premium and charges for effecting it, and may also retain it for a balance due on an insurance account if the broker dealt with the person as if the person was acting on their own account, unless the broker had reason to think otherwise when the debt arose.

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If a broker’s policy acknowledges receipt of the premium, that acknowledgment is conclusive between the insurer and the insured unless there is fraud; it is not conclusive between the insurer and the broker.

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2545. A contract of marine insurance is a contract based upon the utmost good faith. If the utmost good faith is not observed by either party, the other party may apply to have the contract annulled. 1991, c. 64, a. 2545; I.N. 2014-05-01.

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The insured must tell the insurer, before the contract is formed, all known circumstances that could materially affect the premium, risk assessment, or the insurer’s decision to accept the risk, and must make only true representations.

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2547. In the absence of inquiry, the insured is not bound to disclose circumstances which diminish the risk and circumstances which it is superfluous to disclose by reason of an express or implied warranty. Similarly, the insured is not

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2548. A representation as to a matter of fact is deemed true if the difference between what is represented and what is actually correct would not materially influence the judgment of an insurer. A representation as to a matter of

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If insurance is arranged by a representative of the insured, that representative has the same duties as the insured regarding representations and disclosures.

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The insured, the insurer, and their representatives are deemed to know circumstances they ought to know in the ordinary course of business.

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A representation may be withdrawn or corrected before the contract is formed.

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An insured person's omission or misrepresentation can nullify the insurance contract at the insurer's instance.

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A warranty is an undertaking by the insured to state facts as true or false, or to promise that something will or will not be done, or that a condition will be fulfilled.

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A warranty must be strictly complied with, even if it would materially affect an insurer’s judgment.

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The insured does not have to comply with a warranty that has become unlawful or no longer applies because circumstances changed.

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A warranty may be express or implied.

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If property or a ship is warranted “neutral”, the insured must preserve neutrality as far as they can control it, and a ship must also carry necessary proof papers and not falsify, suppress, or use simulated papers.

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2558. There is no implied warranty as to the nationality of a ship, or that her nationality will not be changed during the risk. 1991, c. 64, a. 2558.

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If insured property is warranted to be well or in good safety on a particular day, it is enough if it is safe at any time during that day.

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A voyage contract includes implied warranties that the ship is seaworthy at the start of the voyage, and also at the start of the risk or each stage when those circumstances apply.

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A time contract does not include an implied warranty of seaworthiness.

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A ship is deemed seaworthy if it is fit to encounter the ordinary perils of the seas of the insured marine adventure.

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2563. In a contract of insurance on goods or other movables, there is no implied warranty that the goods or movables are seaworthy. However, in a voyage contract there is an implied warranty that, at the commencement of the voyage, the

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2564. There is an implied warranty that the marine adventure insured is not unlawful and that, so far as the insured can control the matter, it will be carried out in a lawful manner. 1991, c. 64, a. 2564; I.N. 2015-11-01.

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A voyage contract is taken to include a condition that the marine adventure will begin within a reasonable time, even if the ship is not at the stated place of departure when the contract is made.

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If a ship sails from a different place of departure than the one named in the contract, the risk does not attach; the same rule applies if it sails to a different destination than the one named in the contract.

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A change of voyage occurs when, after the risk begins, the decision to voluntarily change the contract destination is manifested.

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A deviation occurs if the ship leaves the contract course, or if none is stated, the usual and customary course.

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2569. Where several places of discharge are specified in the contract, the ship may proceed to all or any of them. However, in the absence of any usage or lawful excuse to the contrary, the ship shall proceed to such of the places as she

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If a contract refers generally to several unnamed places of discharge, the ship must go to them in geographical order unless there is a usage or lawful excuse to the contrary.

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For a voyage contract, the marine adventure must be prosecuted with dispatch.

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Deviation or delay in prosecuting the voyage is excused in specified circumstances.

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When the excuse for a deviation or delay ends, the ship must resume course and continue the voyage with reasonable dispatch.

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If an insured peril interrupts a voyage at an intermediate place in circumstances that justify landing, reshipping, or transhipping the goods, the insurer’s liability continues.

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2575. The notice of loss is governed by the rules applicable in non-marine damage insurance. 1991, c. 64, a. 2575.

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An insurer is liable only for losses directly caused by a peril insured against.

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An insurer on ship or goods is not liable for loss caused by delay, machinery injury not directly caused by maritime perils, or certain losses from rats or vermin, wear and tear, leakage, breakage, inherent defects, or the nature of the insured property.

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A loss may be total or partial, and a total loss may be actual or constructive.

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2579. Unless a different intention appears from the terms of the contract, insurance against total loss includes a constructive total loss as well as an actual total loss. 1991, c. 64, a. 2579; I.N. 2014-05-01; 2016, c. 4, s. 292.

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This section defines when an insured loss counts as an actual total loss.

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2581. There is a constructive total loss where the insured property is abandoned on account of its actual total loss appearing to be unavoidable, or because it could not be preserved from actual total loss without an expenditure which

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Recovery or repair is presumed too costly when specified repair or forwarding costs would exceed the relevant value.

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2583. In estimating the cost of repairs, no deduction is to be made in respect of general average contributions to those repairs payable by other interests. However, account is to be taken of the expense of future salvage operations and of

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If there is a constructive total loss, the insured may treat it as a partial loss or abandon the property to the insurer and treat it as an actual total loss.

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If an insured sues for a total loss but proves only a partial loss, the insured may still recover for the partial loss unless the contract does not cover partial losses.

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If goods have reached their destination but cannot be identified because marks were obliterated or for another reason, the insured may only claim for partial loss.

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If the insured elects to abandon insured property, they must give notice of abandonment, unless there is a total actual loss.

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2588. There are no special requirements as to the form or substance of the notice of abandonment but the insured shall make his intention to effect unconditional abandonment manifest. 1991, c. 64, a. 2588.

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Notice of abandonment must be given with diligence after reliable information of the loss is received.

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Notice of abandonment is unnecessary when giving it would not benefit the insurer at the time the insured learns of the loss.

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The insurer is not required to give notice of the abandonment to the reinsurer.

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The insurer may accept or refuse a validly tendered abandonment and may waive notice of abandonment.

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Accepting the notice counts as acceptance of its sufficiency, makes the abandonment irrevocable, and conclusively admits the insurer’s obligation to indemnify the insured.

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If an insurer accepts abandonment, it becomes owner of what remains of the insured property and related rights and obligations from the time of loss.

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If notice of abandonment is properly given, the insured’s rights are not harmed by the insurer’s refusal to accept the abandonment.

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A particular average loss means a partial loss of insured property caused by an insured peril, and it is not a general average loss.

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The provision defines certain insured preservation or safety expenses as particular charges, and says they are not included in particular average.

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2598. Salvage charges incurred in preventing a loss by perils insured against may be recovered as a loss by those perils. “Salvage charges” means the charges recoverable under maritime law by a salvor independently of contract. They do not

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A general average loss is a loss caused by a general average act.

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2600. Where there is a general average loss, the party on whom it falls is entitled, subject to the conditions imposed by maritime law, to a rateable contribution from the other interested persons, and such contribution is called a general

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If the insured incurs a general average expenditure or sacrifice, the insured may recover from the insurer, and for a sacrifice may recover the whole loss without first enforcing contribution from other parties.

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An insurer is not required to indemnify a general average loss or contribution if the loss was not incurred to avoid, or in connection with avoiding, a covered peril.

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If the ship, freight, cargo, or other movable property is owned by the same insured, the insurer’s liability for general average losses or contributions is calculated as though the property were owned by different persons.

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2604. The measure of indemnity is the sum recoverable, to the full extent of the insurable value in the case of an unvalued contract or, in the case of a valued contract, to the full extent of the value fixed in the contract. 1991, c. 64,

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If a recoverable loss exists under the contract, the insurer is liable for a share of the indemnity based on its subscription amount.

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For a total loss, indemnity is the contract sum for a valued contract, or the insured property’s insurable value for an unvalued contract.

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2607. Where freight is lost, the measure of indemnity is such proportion of the sum fixed in the contract, in the case of a valued contract, or of the insurable value, in the case of an unvalued contract, as the proportion of freight lost

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2608. Where a ship is damaged, but is not totally lost, the measure of indemnity is as follows: (1) where the ship has been repaired, the insured is entitled to the reasonable cost of the repairs, less the customary deductions, but not

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If insured property is totally lost in part, indemnity is calculated by reference to the contract type and the insurable value of the part lost.

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If insured goods are delivered damaged at destination, the indemnity is calculated by a formula based on the difference between sound and damaged values. “Gross value” is defined as the wholesale price at destination, or if none exists, the estimated value, with freight, landing charges, and duty paid beforehand; for goods customarily sold in bond, the bonded price applies.

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2611. Where different species of property are insured under a single valuation, the valuation is apportioned over the different species in proportion to their respective insurable values; similarly, the insured value of any part of a

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If the insured has paid or must pay a general average contribution, indemnity is the full amount when the property is fully insured for its contributory value; otherwise it is reduced in proportion to under-insurance.

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2613. The measure of indemnity recoverable under a civil liability insurance contract is the sum paid or payable to third persons, up to the amount of the coverage. 1991, c. 64, a. 2613; I.N. 2014-05-01; I.N. 2015-11-01.

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2614. Where the loss sustained is not expressly provided for in this subsection, the measure of indemnity is ascertained, as nearly as may be, in accordance with this subsection. 1991, c. 64, a. 2614.

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If insured property is warranted free from particular average, the insured cannot recover for partial loss except a general average sacrifice, unless the contract is apportionable.

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If insured property is warranted free from particular average, the insurer remains liable for salvage charges and certain expenses incurred under the suing and labouring clause to avert an insured loss.

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The insurer remains liable for successive losses, even if their total exceeds the sum insured.

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A suing and labouring clause is treated as part of the insurance contract, and the insured may recover properly incurred expenses under it.

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The insured and their representatives must take reasonable measures, in all cases, to avert or minimize a loss.

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If the insurer pays a total loss, it may take over what remains of the insured property and is subrogated to the insured’s rights and remedies. If it pays only a particular average loss, it gets no right to the remaining property, but is still subrogated to the insured’s rights and remedies up to the amount paid.

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If two or more insurance policies cover the same marine adventure and interest, and the insured sums exceed the recoverable indemnity, the insured is over-insured by double insurance.

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If the insured is over-insured by double insurance, the insured may claim payment from insurers in any order, but may not receive more than the indemnity recoverable.

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If the insured claims under a valued contract, they must credit sums received under any other contract against the valuation. If the contract is unvalued, they must credit such sums against the full insurable value.

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If the insured receives more than the indemnity recoverable, that sum is deemed held on behalf of the insurers.

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If there is double insurance and the insured is over-insured, each insurer must contribute to the loss in proportion to its liability under the contract.

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If the insured amount is less than the insurable value, the insured is treated as their own insurer for the uninsured balance.

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If two or more people mutually insure each other against marine losses, that arrangement is called mutual insurance.

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2628. Articles 2500 to 2502 as to the direct action of injured third persons apply to marine insurance. Any stipulation that is inconsistent with those rules is null. 1991, c. 64, a. 2628; I.N. 2014-05-01.

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Gaming and wagering contracts are valid only when the law expressly allows them, and also when they relate to lawful activities and games of skill or bodily exertion, unless the amount at stake is immoderate in the circumstances.

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If gaming or wagering is not expressly authorized by law, the winning party cannot demand payment and the losing party cannot recover the amount paid, except in cases of fraud or trickery or where the loser is a minor or otherwise under legal incapacity.

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A transaction is a contract that settles or prevents disputes by mutual concessions, and it is indivisible as to its subject.

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No transaction may be made about the status or capacity of persons, or other matters of public order.

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2633. A transaction has, between the parties, the authority of res judicata. A transaction is not subject to forced execution until it is homologated. 1991, c. 64, a. 2633; I.N. 2016-01-01 (NCCP); 2016, c. 4, s. 297.

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Error of law is not a cause for annulling a transaction.

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A transaction based on a null title is null, unless the parties expressly covered that nullity; a transaction based on writings later found to be false is also null.

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2636. A transaction upon a lawsuit is null if the parties, or one of them, were unaware that a judgment having become final had terminated the litigation. 1991, c. 64, a. 2636; I.N. 2014-05-01; 2016, c. 4, s. 298.

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Later-discovered documents do not by themselves let a transaction be annulled, unless they were withheld by a party or, knowingly, by a third person.

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An arbitration agreement is a contract in which the parties agree to submit a present or future dispute to one or more arbitrators, instead of the courts.

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Certain disputes cannot be sent to arbitration, and an arbitration agreement cannot be challenged just because the dispute rules are public-order rules.

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An arbitration agreement must be in writing.

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2641. A stipulation which places one party in a privileged position with respect to the designation of the arbitrators is null. 1991, c. 64, a. 2641.

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2642. An arbitration agreement contained in a contract is considered to be an agreement separate from the other clauses of the contract and where the arbitrators find the contract to be null, the arbitration agreement is not for that

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2643. Subject to the peremptory provisions of law, the arbitration procedure is governed by the contract or, failing that, by the Code of Civil Procedure (chapter C-25.01). 1991, c. 64, a. 2643; I.N. 2014-05-01; I.N. 2016-01-01 (NCCP).

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2644. The property of a debtor is charged with the performance of his obligations and is the common pledge of his creditors. 1991, c. 64, a. 2644.

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A person owing a personal obligation must charge all present and future property to perform it, except property exempt from seizure or subject to a permitted division of patrimony.

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Creditors may start judicial proceedings to have a debtor’s property seized and sold.

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2647. The legal causes of preference are prior claims and hypothecs. 1991, c. 64, a. 2647; I.N. 2014-05-01.

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Property that is exempt or may be exempt from seizure under the Code of Civil Procedure, and that falls within that Code’s limits, cannot be seized.

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A stipulation of unseizability is ineffective unless it is made in a gratuitous, temporary act justified by a serious and legitimate interest.

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A prior claim gives a creditor priority over other creditors, including hypothecary creditors, based on the claim’s origin.

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2651. The following are the prior claims and, notwithstanding any agreement to the contrary, they are in all cases collocated in the order here set out: (1) legal costs and all expenses incurred in the common interest; (2) the claim of a

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2652. Prior claims for legal costs and expenses incurred in the common interest may be enforced on movable or immovable property. 1991, c. 64, a. 2652; I.N. 2014-05-01.

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The State may execute prior claims for sums due under fiscal laws against movable property.

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Certain creditors may ask the State to state the amount of its prior claim, and the State must file and register that declaration within 30 days after notice.

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Prior claims of municipalities, school service centres, and school boards for property taxes create a real right, and the holder can follow the taxable property into whoever later holds it.

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Prior claims may be set up against other creditors, or against all third persons if they constitute a real right, without being published.

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Prior creditors may use legal remedies to enforce and realize their prior claim, in addition to any personal or real action rights and provisional measures under the Code of Civil Procedure.

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2657. Prior claims rank, according to their order among themselves, and without regard to their date, before movable or immovable hypothecs. Prior claims of the same rank concur in proportion to the amount of each claim. 1991, c. 64, a.

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In a distribution or collocation among several prior creditors, a creditor with an indeterminate, unliquidated, or conditional claim is collocated according to rank, subject to conditions in the Code of Civil Procedure.

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A legal priority for certain claims ends automatically when the obligation that caused it is extinguished.

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A hypothec is a real right on property that secures performance of an obligation.

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A hypothec is only valid while the obligation it secures continues to exist.

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2662. A hypothec is indivisible and subsists in its entirety over all the charged property, over each item of that property and over every part of that property, even where the property or obligation is divisible. 1991, c. 64, a. 2662;

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A hypothec must be published under the relevant publication rules for its hypothecary rights to be enforceable against third persons.

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A hypothecation is only valid under conditions and forms authorized by law.

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A hypothec is classified as movable or immovable depending on the property it charges. A movable hypothec may be created with or without delivery, and if it is created with delivery it may also be called a pledge.

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A hypothec is a charge on specified corporeal or incorporeal property, including multiple items or all property in a universality.

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2667. A hypothec secures the capital, the interest accrued thereon and the costs, other than fees for professional services, legitimately incurred for their recovery or to conserve the charged property. 1991, c. 64, a. 2667; 2002, c. 19,

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A hypothec may not charge property exempt from seizure, including movable property used as the debtor’s principal residence household property.

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2669. A hypothec granted on the bare ownership does not extend to the full ownership upon extinction of the dismemberment of the right of ownership. 1991, c. 64, a. 2669.

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A hypothec on another person’s property or on future property charges only when the grantor later acquires title to the hypothecated right.

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A hypothec extends to everything united to the property by accession.

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Movables attached to an immovable without losing their individuality are treated as movable for enforcement of the hypothec while the hypothec lasts.

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