The court considered whether an underwiter’s slip was admissible when construing the policy which followed.
Held: Staughton LJ said: ‘It is now, in my view, somewhat old-fashioned to approach such a problem armed with the parol evidence rule, that evidence is not admissible to vary or contradict the words of a written contract. The modern approach of the House of Lords is that, on the positive side, evidence should be admitted of the background to the contract, the surrounding circumstances, the matrix, the genesis and aim.’ and as to consideration of the surrounding circumstances: ‘The notion is [that] what the parties had in mind, and the Court is entitled to know, [is] what was going on around them at the time when they were making the contract. This applies to circumstances which were known to both parties, and to what each might reasonably have expected the other to know.’
‘One can . . readily assume that a reinsurance contract was intended to cover the same risks on the same conditions as the original contract of insurance, in the absence of some indication to the contrary.’
Judges:
Staughton LJ
Citations:
[1992] 2 Lloyds Rep 127
Jurisdiction:
England and Wales
Citing:
Cited – Reardon Smith Line Ltd v Yngvar Hansen-Tangen (The ‘Diana Prosperity’) HL 1976
In construing a contract, three principles can be found. The contextual scene is always relevant. Secondly, what is admissible as a matter of the rules of evidence under this heading is what is arguably relevant, but admissibility is not decisive. . .
Cited – Prenn v Simmonds HL 1971
Backgroun Used to Construe Commercial Contract
Commercial contracts are to be construed in the light of all the background information which could reasonably have been expected to have been available to the parties in order to ascertain what would objectively have been understood to be their . .
Appeal from – Youell v Bland Welch and Co Ltd (No 1) QBD 1990
The insurance slip was superseded by a formal policy. This was agreed but the defendant reinsurers submitted that the slip could be looked at as an aid to the construction of the policy.
Held: It was inadmissible: ‘The drafting of the slip . .
Cited by:
Cited – Scottish Power Plc v Britoil (Exploration) Limited CA 18-Nov-1997
Five contracts existed regarding sale of natural gas from a field in the North Sea. The parties disputed whether the terms prevented the sale of gas to others.
Held: ‘On the language of the contract, the Sellers are not entitled to sell gas to . .
Cited – Lexington Insurance Co v AGF Insurance Ltd HL 30-Jul-2009
The respondent insurers had been held liable in Washington, and had been granted indemnity against the appellants by the Court of Appeal. The insurance contract had been under the law of Pennsylvania, but that of the re-insurance under the law of . .
Lists of cited by and citing cases may be incomplete.
Contract
Updated: 30 April 2022; Ref: scu.199924