INSURANCE LAW ā Insurance Policy ā Interpretation of Clauses ā Words to be Given Ordinary Meaning
Principle Statement
It is settled law that where parties are ad idem on the terms of a contract, the function of the court is to give effect to the terms without more as it is the duty of the court to give effect to the intention of the parties. In the instant case, the contract is in writing, exhibit C, and the court is faced with the construction of clause 8(C) supra. The question that consequently arises is not what the parties have intended to do by entering into exhibit C but what is the meaning of the words as used in clause 8(C).
Ratio Decidendi (Source)
Per Onnoghen, JSC, in Yadis Nig Ltd v. Great Nigeria Insurance Co. Ltd (2007) NLC-123-333-2001(SC) at pp. 18ā19; Paras EāA.
"It is settled law that where parties are ad idem on the terms of a contract, the function of the court is to give effect to the terms without more as it is the duty of the court to give effect to the intention of the parties. In the instant case, the contract is in writing, exhibit C, and the court is faced with the construction of clause 8(C) supra. The question that consequently arises is not what the parties have intended to do by entering into exhibit C but what is the meaning of the words as used in clause 8(C)."
Explanation / Scope
This principle establishes that the court interprets contractual clauses by giving words their ordinary meaning. Where parties agree on contract terms, the court gives effect to those terms. The court does not ask what the parties intended but what the words mean. The principle applies in insurance contract interpretation. It reflects the objective theory of contract interpretation. The principle ensures certainty and predictability. It applies where terms are clear and unambiguous. The court cannot rewrite the contract. The principle prevents parties from escaping liability by claiming different intentions.
