2017 (Mercantile Law) Bar Exam Questions: Question 1

[Answer/discuss the question below, or see 2017 bar exam Mercantile Law Instructions; Also check the other 2017 Mercantile Law Questions: 234567891011, and 12; See also 2017 Bar Exam: Information, Discussions, Tips, Questions and Results]

-I-

A.

Absolute Timber Co. (ATC) has been engaged in the logging business in lsabela. To secure one of its shipments of logs to be transported by Andok Shipping Co., ATC purchased a marine policy with an “all risks” provision. Because of a strong typhoon then hitting Northern Luzon, the vessel sank and the shipment of logs was totally lost. ATC filed its claim, but the insurer denied the claim on several grounds, namely: (1) the vessel had not been seaworthy; (2) the vessel’s crew had lacked sufficient training; (3) the improper loading of the logs on only one side of the vessel had led to the tilting of the ship to that side during the stormy voyage; and (4) the extremely bad weather had been a fortuitous event.

ATC now seeks your legal advice to know if its claim was sustainable. What is your advice? Explain your answer. (3%)

B.

The newly restored Ford Mustang muscle car was just released from the car restoration shop to its owner, Seth, an avid sportsman. Given his passion for sailing, he needed to go to a round-the-world voyage with his crew on his brand-new 180-meter yacht. Hearing about his coming voyage, Sean, his bosom friend, asked Seth if he could borrow the car for his next roadshow. Sean, who had been in the business of holding motor shows and promotions, proposed to display the restored car of Seth in major cities of the country. Seth agreed and lent the Ford Mustang to Sean. Seth further expressly allowed Sean to use the car even for his own purposes on special occasions during his absence from the country. Seth and Sean then went together to Bayad Agad Insurance Co. (BAIC) to get separate policies for the car in their respective names.

SAIC consults you as its lawyer on whether separate policies could be issued to Seth and Sean in respect of the same car.

(a) What is insurable interest? (2%)

(b) Do Seth and Sean have separate insurable interests? Explain

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