Terms of the contract provided under warranties, that without written consent of the insurer the vessel could not be transferred, assigned, hired, or chartered and must be used solely for pleasure purposes.

(Texas state statute provides that only in the event that the breach is the cause for the subsequent loss may the insured be barred from recovery.)

The Federal District Court found that The Wilburn Boat Company was unable to recover for their loss due to their failure to comply with the specific terms of the contract.

The Supreme Court reversed and remanded, establishing that there was no federal admiralty law rule governing warranties in a marine insurance contract.

As a result, multiple levels of uncertainty were created; more specifically, there has been a great deal of confusion over which state's law should govern a given marine insurance contract and the apparent unpredictability of the prospective outcomes.