UNIT 10
INTERPRETATION OF INSURANCE CONTRACTS
- According to the parol evidence-rule, where the contract states that it is the sole source of the
agreement between the parties, no extrinsic evidence beyond the contract itself may be presented to
prove the content of the contract
- Where there is uncertainty or ambiguity in the wording of a contract, extrinsic evidence is allowed for
the interpretation of the contract
- Some rules are always applied and are regarded as a PRIMARY RULES:
o True intention of the parties has to be determined
1. Done by giving words their general, grammatical meaning
2. Every word must be given a meaning
3. The contract must also be interpreted as a whole
• IF NOT ABLE TO DETERMINE THE TRUE MEANING -à APPLY SECONDARY
RULES:
1. Immediate language of the parties prevails. Written words enjoy preference over
typed words, which enjoy preference over printed wording
2. Wording or clauses must be interpreted according to the nature and purpose of the
contract
3. The conduct of the parties after conclusion of the contract could shed some light on
their intention regarding the problematic wording or clause
4. General words, used in conjunction with specific words, are limited in their meaning
according to the meaning of the specific words (known as eiusdem generis or
noscitur a sociis rule)
5. The court should choose the meaning which would render the contract valid and
enforceable, rather than that which would render it null and void
6. Where words used are doubtful, they must be interpreted to place the least possible
burden on the debtor or promissor ( known as the quod minimum rule)
7. The courts should choose the most equitable interpretation of the clause or words in
question
8. As a last resort the contra proferentem rule may be applied
INTERPRETATION OF INSURANCE CONTRACTS
- According to the parol evidence-rule, where the contract states that it is the sole source of the
agreement between the parties, no extrinsic evidence beyond the contract itself may be presented to
prove the content of the contract
- Where there is uncertainty or ambiguity in the wording of a contract, extrinsic evidence is allowed for
the interpretation of the contract
- Some rules are always applied and are regarded as a PRIMARY RULES:
o True intention of the parties has to be determined
1. Done by giving words their general, grammatical meaning
2. Every word must be given a meaning
3. The contract must also be interpreted as a whole
• IF NOT ABLE TO DETERMINE THE TRUE MEANING -à APPLY SECONDARY
RULES:
1. Immediate language of the parties prevails. Written words enjoy preference over
typed words, which enjoy preference over printed wording
2. Wording or clauses must be interpreted according to the nature and purpose of the
contract
3. The conduct of the parties after conclusion of the contract could shed some light on
their intention regarding the problematic wording or clause
4. General words, used in conjunction with specific words, are limited in their meaning
according to the meaning of the specific words (known as eiusdem generis or
noscitur a sociis rule)
5. The court should choose the meaning which would render the contract valid and
enforceable, rather than that which would render it null and void
6. Where words used are doubtful, they must be interpreted to place the least possible
burden on the debtor or promissor ( known as the quod minimum rule)
7. The courts should choose the most equitable interpretation of the clause or words in
question
8. As a last resort the contra proferentem rule may be applied
