Tag archives: Interpretation

Bad subcontractor work not an ‘accident’ – Ohio USA

Ohio’s high court has held that damage from a subcontractor’s faulty work is not fortuitous in the context of a commercial general liability policy which covered an ‘occurrence’ meaning an ‘accident, including continuous or repeated exposure to substantially the same general harmful conditions’ causing property damage including physical injury to or destruction of tangible property. … Continue reading

Application of insolvency exclusion (UK)

Where a professional indemnity policy excluded claims ‘arising out of or related directly or indirectly to the insolvency of the insured’ the court absolved the insurer from liability in a claim by a financial management company that had lost money on a £200 000 investment when the issuer of a bond went insolvent. The court held … Continue reading

Ambiguous limits of indemnity (UK)

Where a policy schedule and the wording of the policy were not on the face of it consistent, the court considered the combined effect of the limit for a single claim and a number of linked claims and held that the same £10 million applied to both. According to the schedule, the limit of indemnity for … Continue reading

Sanctity of contracts is good public policy

A lease was challenged on the grounds that the cancellation for non-payment of rent, after prior notice that the rent had not been paid, should not be enforceable because it was against public policy to cancel the agreement for the lease of a hotel that had been in place since 1982. Although good faith is … Continue reading

Rules of interpretation of contract

Clauses in a contract must be interpreted: by having regard to the language used in the light of the ordinary rules of grammar and syntax; in the context of the clauses being interpreted and the agreement as a whole; and taking into account the apparent purpose of the clauses so as to give the contract … Continue reading

Contracts need consensus

The basis of any contract is consensus between the two parties. The court in Vincorp (Pty) Ltd v Trust Hungary ZRT found that the two parties alleged by the plaintiff to be parties to a contract had different things in mind when they negotiated and that no contract came into being because it lacked the … Continue reading

Interpretation of contracts by giving extreme examples is not helpful (UK)

A recent UK case made the following point regarding interpretation of contracts based on hypothetical, extreme examples: ‘There was also, as there sometimes is in commercial cases that turn on points of interpretation, the temptation to provide illustrations of ‘commercial sense’ by the use of hypothetical, and occasionally extreme, examples of what any particular interpretation … Continue reading

Two bridge collapses from same design flaws are ‘related claims’ (US)

A number of lawsuits were pursued against an engineering design firm when two pedestrian bridges collapsed on 13 and 14 November 2014 causing death and damage. The court held that these were ‘related claims’ as defined in the engineering firm’s professional indemnity policy. The policy provided that ‘all related claims shall be considered a single claim’. … Continue reading

Interpreting insurance policies (UK)

A recent UK decision made some interesting remarks regarding the interpretation of an insurance policy which should be no different in South Africa: The wording of the schedule and the policy wording must be considered together without giving greater weight to either. The fact that clearer words could have been used does not mean that … Continue reading

Reciprocal performance under reciprocal contracts

The principle of reciprocity in contracts recognises the fact that in many contracts the common intention of the parties, expressed or unexpressed, is that there should be an exchange of performances. There is a presumption that interdependent promises are reciprocal unless there is evidence to the contrary. The common intention is that neither of the … Continue reading

Interpretation of contract: A lawyer’s understanding must not always be imposed on non-lawyers

In an important development of the law of interpretation of contracts, the Constitutional Court held in July 2017 that where ordinary laypeople use ordinary words in a contract, their understanding of the meaning of the words used must not be overridden by a lawyer’s understanding based on their knowledge of legal principles not familiar to … Continue reading

Principles of contract interpretation

Where parties signed a memorandum of understanding as an interim arrangement for ten months in anticipation of entering into a more comprehensive and lasting agreement the MOU was binding because the full agreement did not materialise. An attempt to call contextual evidence to change the agreement was not allowed. In the case of Urban Hip … Continue reading

Interpretation of exclusions

Traditionally, ambiguous exclusion clauses provide little or no protection because they will be interpreted narrowly and against the person who tried to exclude their liability (in Latin the contra proferentem rule). In the light of modern methods of interpretation it is doubtful that this principle of interpretation can be used in every case for anything … Continue reading

Does the principle of pay now, argue later apply to an adjudicator’s decision given out of time?

When adjudication is incorporated into contracts, often construction contracts, as a means of dispute resolution it is usually included with other mechanisms such as mediation, arbitration and possibly even an approach to a court so that a party dissatisfied with an adjudicator’s award can attempt to rectify what is considered wrong with it in a … Continue reading

Public holidays are not bank holidays

The definition of ‘business day’ in South African agreements often includes phrases like ‘any day on which banks are open for business in South Africa’. These words are confusing and it is sufficient to refer to a day other than a Saturday, Sunday or official public holiday. The words have crept in from English law … Continue reading

A US double insurance contribution case

A Los Angeles appeal court ordered two excess insurers to contribute pro rata to a $4 million settlement of a lawsuit by a building inspector who was paralysed after falling from a ladder at a construction site. Westchester Insurance Co was the excess insurer of the general contractor and Hudson Specialty Insurance Co was excess insurer … Continue reading
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