The Civil Code states that in case of ambiguity, it is necessary to search for the common intention of the parties, taking into account the circumstances in which it was conceived.
The drafting or interpretation of a contract is often a source of conflict. This is how a landlord drafts, without the help of a lawyer, an agreement for the rental of a building and its contents. This agreement includes a purchase option in favor of the tenant, which sets the purchase price at $215,000, minus the monthly rents that will be paid until the final acquisition of the building. Based on this agreement, the landlord and tenant are "specifically named as insured in the insurance policy." Several months go by, the parties comply with their commitments, but unfortunately, the building is destroyed by a fire.
The insurer, even if the sale did not take place, relies on this agreement and offers to pay the landlord, as an unpaid seller, the sum of $215,000, despite the fact that the market value of the building and its contents amounts, according to the parties, to $395,000.
The Court, while highlighting the internal inconsistencies of the document, confirms that we are dealing with a lease with an option to purchase. The court refutes the insurer's claims, relying on the Civil Code which stipulates that in case of ambiguity, one must seek the "common intention of the parties, taking into account the agreement and the circumstances in which it was conceived." The Court refers the case back to the lower court to determine the actual value of the insured property at the time of the loss.
What is clear to one may be obscure to another. Everyone has their own vision, their own chiaroscuro.
*CA 500-09-008980-997, 2002-06-17
