Extraordinarily, a case involving a passenger opening a car door and scratching a neighbouring vehicle in a supermarket carpark led to a decision before the Court of Justice of the European Union. Europe’s highest court found that this is ‘use of vehicles’ for the purposes of motor vehicle insurance. The event happened in Latvia where the claim was rejected on the basis that the liability was not one that had to be covered by a…

Under the business judgment rule, a director or officer may be excused from conduct which has adverse circumstances for the company if their judgment, albeit poor judgment, was exercised in good faith and in the interests of the company. In an action in Delaware, USA, the CEO was denied this assistance by the court because, faced with job uncertainty, he put his own interests above those of shareholders. The court refused to dismiss the fiduciary…

The Supreme Court of Appeal found that if the underlying cause of a settlement does not fall within the parameters of the National Credit Act (NCA), then the settlement agreement cannot logically be converted to a credit agreement under the NCA. The underlying cause (in this case the rental agreement) is of vital significance because the compromise (settlement) remains linked to the underlying cause. The express references in the settlement agreement or acknowledgement of debt…

Where the purchase price of imported sugar included the import duty and the purchase price had to be reduced if the duty was reduced, the persistent claim by the seller for the unreduced amount was a repudiation and led to the lawful cancellation of the sugar contract. Payment of the sugar contract was to be made against invoice. The invoice would be rendered on delivery and payment would become due on delivery. The purchaser informed…

Where the purchaser of an oil refinery sued the seller for breach of contract for $25 million damages resulting from a fire caused by various acts and omissions of the seller prior to the sale, the claim was not covered under the seller’s commercial general liability policy. The claim was not based on property damage but on damages arising from false representations and the failure to deliver what was bargained for. The typical liability policy covered…

The Supreme Court of Appeal has reaffirmed the principle that where a party alleges that a compromise (settlement) has been effected in an exchange of correspondence it must be proved that the offer of compromise was accepted. The acceptance must be absolute, unconditional and identical with the offer. Otherwise there is no consensus and no settlement. A settlement agreement is a form of contract and must comply with all general contractual requirements as regards consensus,…

The Supreme Court of Appeal has yet again reaffirmed the principles dealing with the interpretation of contracts. Interpretation of contracts is a unitary exercise which starts with the text to be interpreted and considers it within the contract as a whole, and in context. It requires consideration of text, context and purpose of the contract. The considerations include the nature, formality and quality of the drafting of the contract. The words in a document must…