Supreme Court of the US, 2008

The other legal issue that emerges is the power of the company to refuse to pay insurance to their customers at any time they deem it fit to do so. In Paul vs. Virginia the court held that insurance contacts were not commercial contacts and were therefore not subject to commercial contacts rules. However this position changed in 1944 when the court in the case of United States vs.

South Eastern Underwriters Association decided that insurance contracts were not in any way different from other commercial contracts and that they were subject to change just like any other commercial contracts. It was therefore in order for the company to decide that they can refuse to pay insurance benefits to their customers at any time. However this clause is vague because the circumstances in which the company may refuse to pay insurance benefits to their customers must be well spelt out. Due this ambiguity the clause is likely to be interpreted by the court against the company.

It must also be remembered that at the inception of the company Jack entered a contract with the company which provided that 75% of Jack’s earnings were covered just incase he was unable to work either due to injury or illness. But when Jack was hit by a vehicle and sustained injury which made him incapable of working for the next three years the company refused to pay him his benefits in accordance with the contact. This is a violation of his (Jack’s) rights. In this case therefore Jack does have a case against the company.

In conclusion Jack can sue the company on the ground of breach of contract and be warded damages since a number of his rights were violated by the company. Words: 1905.

Bibliography. Corporations & Securities Legislation. (2001). Corporations Act 2001 (Cth) – The latest edition 2009. Sage: London. Pamela, H. , Ian. & Geof, S. (2009). Commercial Applications of Company Law (10th ed, 2009). Oxford: London. Robert, B. , Keith, F. and Saul, F. (2008). Corporations and Associations Cases and Materials (10th ed, 2008). Oxford: London.