INTERPRETATION OF CONTRACTS

1
INTERPRETATION OF CONTRACTS

• Lecture 4 - week 2

2
REQUIREMENTS OF A CONTRACT

• Two or more persons
• Agreement
• Offer
• Acceptance
• Consideration
• Intention to enter into a legal relationship
• Capacity to contract

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DRAFTING

• Brady v. Irish National Insurance Co Ltd, (1986)
  ILRM 669.
• in so far as this combined document consists of
  what might be described as the ordinary policy of
  insurance it is wholly, completely and absolutely
  inapplicable to the type of risk with which
  either the insured or the insurer is concerned

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GENERAL RULES OF INTERPRETATION

• The intention of the parties must prevail.
• Policy only evidence of contract and not contract
  itself.
• The policy must be read as a whole.
• If contradictions hierarchy of documents
• typed over printed
• written over typed

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GENERAL RULES

• The ordinary rules of grammar apply.
• Words understood in their general and popular
  sense unless obvious this not the intention
• Words will be construed against the drawer of the
  document.

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THE GOLDEN RULE

• Intention of the parties prevails.
• Rohan Construction Ltd v. Insurance Corporation
  of Ireland
• The intention must be looked for in the policy,
  including any documents incorporated therein.
• Court places itself in the same situation as the
  parties

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LIBERALLY INTERPRETED

• Sheridan v. Phoenix Life (1858)
• Policy requires liberal interpretation
• Keating v. New Ireland Assurance Co.plc
• Applied officious bystander test
• Precedent must be followed
• Foreign courts decisions may be used as a guide

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ORDINARY MEANING

• Robertson v. French (1803)
• A policy of insurance is to be construed
  according to its sense and meaning as collected,
  in the first place, from the terms used in it,
  which terms are themselves to be understood in
  their plain, ordinary and popular sense.
• Technical terms must be construed in their proper
  sense
• Grammatical meaning of words will be accepted

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RIOT OR CIVIL COMMOTION

• Boggan v. Motor Union Insurance Co Ltd (1922) 2
  IR 184
• The term riot used in its technical sense
• Two or more persons gathered together with a
  common intent and puts third parties in fear of
  violence.
• Other jurisdictions this may not be the case.
  Canada and South Africa must have accepted
  meaning and not technical

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CONTRA PREFERENS

• When the meaning of a sentence is ambiguous it
  will be interpreted against the drafter.
• This normally insurer
• General Omnibus Co. Ltd v. London General
  Insurance Co Ltd
• Insurer must bring their case clearly and
  unambiguously within their exception

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PAROL EVIDENCE

• Evidence of the meaning of the contract outside
  the document itself.
• These circumstances immediately surrounding the
  formation of the contract.
• Practice of the industry
• Can only use parol evidence to ascertain intent
  or context and not vary the wording.

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PRIVITY OF CONTRACT

• The contract cannot pass on a benefit to a third
  party.
• The contract can only benefit the insured.
• Exceptions
• Agency
• Assignment
• Noting of interest - Colonial Mutual v. ANZ
  Banking Group
• Trusts

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STATUTORY EXCEPTION

• UK - Third Party (Rights Against Insurer) Act
  1930
• Puts a third party in place of liquidated insured
• Civil Liability Act 1961, S.62
• Dunne v. P.J. White Construction
• Allows third party damages not too fall into
  estate of bankrupt employer.
• Road Traffic Act 1961, S.76
• Party injured in vehicle accident can sue insurer

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MOTOR INSURERS BUREAU

• Agreement between government and motor insurers.
• MIBI agrees to compensate third parties injured
  in accidents caused by negligent use of motor
  vehicles where not insurance policy.
• Theoretically injured party cant sue but MIBI
  agreed with government they can.

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QUESTIONS ?