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IAI Actuarial Core Principles · Business Management · Implied terms, exclusion of liability, contractual remedies and damages

Apex Pensions contracts with Dr Iyer for a mortality study. The agreement states that all terms are conditions, including a clause requiring the final appendix to be printed in blue ink. Dr Iyer prints it in black ink; the content is identical. Apex tries to terminate and hire another actuary at a cheaper rate. Which statement is most defensible?

The outcome turns on construction of the contract. An express label is strong evidence the parties intended a condition, but a court may hesitate where the term is plainly trivial and termination is opportunistic. Neither automatic validity nor automatic invalidity is the correct position.

  1. ATermination is certainly valid, because the parties' label is conclusive in every circumstance
  2. BTermination is invalid, because courts never respect a label given to a term
  3. CApex has an automatic right to double damages
  4. DTermination is a matter of the contract's construction; the label is strong evidence of intent, but a court may hesitate where the term is plainly trivial and the right is used opportunisticallyCorrect
  5. The contract becomes voidable by Dr Iyer

Explanation

Parties may agree that a term is a condition and courts give this weight. However, the label is not blindly applied; interpretation looks to intention and to whether the term is plainly trivial. Options claiming certainty either way overstate the position.

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