In the United Kingdom, the Marine Insurance Act 1906 clearly disclaims an implied warranty of seaworthiness in a time policy of marine insurance.1 Section 39(5) of the Act provides:

However, across the Atlantic Ocean there has never been a clear American rule as to when, if ever, a warranty of seaworthiness is to be implied into a time policy. In the United States there is no uniform marine insurance legislation; rather, a question such as the existence of an implied warranty can normally be resolved only after decades of sifting through the large number of Federal and State courts. Although still adrift, U.S. Federal maritime law upon the issue generally appears to be moving, albeit in occasionally confused seas, toward a course in line with that set by s. 39(5) of the 1906 British Act.

It has often been indicated that American law regarding a warranty of seaworthiness in a time policy more strongly favours the underwriter than does the corresponding British law.2 As to such a warranty, some courts have formulated what they have chosen to call the “American Rule”. Perhaps the most often cited statement of the “American Rule” appears in Saskatchewan Government Insurance Office v. Spot Pack.3 In that case, Judge Brown of the 5th Circuit Court of Appeals said: