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

3. 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”

4. 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

5. 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.

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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.

12. 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

13. 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

14. 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 can’t sue but MIBI agreed with government they can.

15. QUESTIONS ?