A. THE GENERAL RULE
Parol evidence is not admissible to contradict or vary the meaning of the policy, since, after the contract is reduced into writing, the parties are not at liberty to show, by giving evidence of what passed between them at the time of effecting the policy, that they contracted otherwise than in accordance with the words in which they have chosen to express the terms of their agreement.
B. EXCEPTIONS TO THE GENERAL RULE
There are certain cases, however, in which parol evidence is admissible:
1 To prove that the policy is void.
2 To prove that the policy does not accurately set out the actual terms of the agreement between the parties.
3 To prove a parol condition on the faith of which the policy was made, and until the fulfillment of which the policy was made, and until the fulfillment of which the policy was not to become operative.
4 To supplement the contract by adding collateral terms.
5 To identify the subject-matter of insurance.
6 To show that a word is used in a peculiar sense.
1. To prove that the policy is void
Where the question arises whether the policy is binding or not by reason of an alleged breach of duty, the statements of the parties, including thewas or was explanations of their agents and the documents which pass between them, may be referred to for the purpose of showing whether the duty was or was not performed.
In the case, there is no attempt to set up any other contract than the contract contained in the policy; and the evidence is used for the purpose of proving or disproving its binding effect. Thus, if the proposal contains a declaration that the statements in it are to be the basis of the contract, the policy is avoided by their untruth, even though the proposal is not incorporated into the policy.
The onus of proving that such documents exist, or that such statements were made, and that the policy was made on the faith of them, lies on the party seeking to establish the case which they support. Thus, where the insurers seek to avoid the policy on the ground that the proposal signed by the assured contained inaccurate statements, they must prove in the first instance that there is, in fact, a proposal signed by the assured, and, if they are unable to do so, their objection to the validity of the policy fails.
2. To prove that the policy does not contain the correct terms
Where the question arises whether the policy is issued contains the real contract agreed between the parties, the Court must necessarily refer to what passed between them during the negotiations, including any preliminary documents, such as a prospectus, a proposal, or a ‘slip’, in order to discover whether there was ever, in fact, a concluded agreement, and if so, what were its precise terms.
In this case, an attempt is made to set up a different and inconsistent contract, the ground being that the policy does not truly exhibit the terms agreed.
Evidence of conversations with the insurers or their agents, and of verbal representations made by them for the purpose of inducing the insured to enter into the contract, is also admissible for the same purpose.
The onus of proof lies on the party asserting that the policy is incorrect.
3. To prove a parol condition
The Court will admit parol evidence to show that the policy was not to come into force until a parol condition had been fulfilled.
4. To add collateral terms
Parol evidence is admissible to supplement the contract contained in the policy by adding collateral terms. But such terms must not be inconsistent with the express terms of the policy.
5. To identify the subject-matter of insurance
Thus, in the case of an accident insurance policy where the question was whether the person whose safety was insured had himself effected the policy or whether his son had effected it for his own benefit, evidence that the father had talked of insuring his life was admitted. Similarly, in a case relating to employers’ liability insurance, the Court admitted in evidence a letter from the insurers identifying a particular disease as within the risk.
The description in the policy must, however, be appropriate to the subject-matter sought to be identified.
6. To show that a word is used in a peculiar sense
Parol evidence is admissible to show that a word is used in a peculiar sense, differing from its ordinary meaning where the word is used with reference to a particular district, occupation, or trade, and by the usage of that district, occupation, or trade the word is understood in a peculiar sense. But a usage will not be admitted in evidence where it is inconsistent with the express language of the policy.
Further, where the word is, on the face of it, ambiguous, reference may be made to the surrounding circumstances, including the object with which the words were presumably introduced.
C. THE EFFECT OF THE ADMISSION OF PAROL EVIDENCE
Where parol evidence is admitted, the matter in issue is no longer a mere question of construction to be decided by the Court, but becomes a question of fact for the jury.
Where the question arises whether the policy is issued contains the real contract agreed between the parties, the Court must necessarily refer to what passed between them during the negotiations, including any preliminary documents, such as a prospectus, a proposal, or a ‘slip’, in order to discover whether there was ever, in fact, a concluded agreement, and if so, what were its precise terms.
In this case, an attempt is made to set up a different and inconsistent contract, the ground being that the policy does not truly exhibit the terms agreed.
Evidence of conversations with the insurers or their agents, and of verbal representations made by them for the purpose of inducing the insured to enter into the contract, is also admissible for the same purpose.
The onus of proof lies on the party asserting that the policy is incorrect.
3. To prove a parol condition
The Court will admit parol evidence to show that the policy was not to come into force until a parol condition had been fulfilled.
4. To add collateral terms
Parol evidence is admissible to supplement the contract contained in the policy by adding collateral terms. But such terms must not be inconsistent with the express terms of the policy.
5. To identify the subject-matter of insurance
Thus, in the case of an accident insurance policy where the question was whether the person whose safety was insured had himself effected the policy or whether his son had effected it for his own benefit, evidence that the father had talked of insuring his life was admitted. Similarly, in a case relating to employers’ liability insurance, the Court admitted in evidence a letter from the insurers identifying a particular disease as within the risk.
The description in the policy must, however, be appropriate to the subject-matter sought to be identified.
6. To show that a word is used in a peculiar sense
Parol evidence is admissible to show that a word is used in a peculiar sense, differing from its ordinary meaning where the word is used with reference to a particular district, occupation, or trade, and by the usage of that district, occupation, or trade the word is understood in a peculiar sense. But a usage will not be admitted in evidence where it is inconsistent with the express language of the policy.
Further, where the word is, on the face of it, ambiguous, reference may be made to the surrounding circumstances, including the object with which the words were presumably introduced.
C. THE EFFECT OF THE ADMISSION OF PAROL EVIDENCE
Where parol evidence is admitted, the matter in issue is no longer a mere question of construction to be decided by the Court, but becomes a question of fact for the jury.