General Causes and General Usages of Trade

Section 32. Each party to a contract of insurance is bound to know all the general causes which are open to his inquiry, equally with that of the other, and which may affect the political or material perils contemplated; and all general usages of trade.

Under this section, what is each party to a contract of insurance bound to know?

There are two matters that each party to a contract of insurance is bound to know, namely:

1.       General clauses

2.       General usages of trade.

A party however, is not bound to know all the classes of general clauses but only such general causes:

a)      Which are open to his inquiry, equally with that of the other;

b)      Which may affect either the political or material perils contemplated.

What is the import of the aforementioned rules?

The insured need not communicate public events such as that the nation is at war, or what the law is, or political conditions in other countries, the sources of this information being equally open to the insurer who is also presumed to know such events.  Likewise, the insurer is charged with the knowledge or general trade usages and rules of navigation, kinds of seasons and all the risks connected with navigation.