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Darner Motor Sales v. Universal Underwriters Ins. Co.

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Brief Fact Summary.

Darner Motor Sales (Darner) sued Universal Underwriters Ins. Co. after being sued for a discrepancy in insurance coverage from one of Darner’s renters.

Synopsis of Rule of Law.

The parol evidence rule sometimes allows the introduction of outside evidence to interpret agreements.

Points of Law - Legal Principles in this Case for Law Students.

A reason to believe: may be (1) shown by the prior negotiations, (2) inferred from the circumstances, (3) inferred from the fact that the term is bizarre or oppressive, (4) proved because the term eviscerates the non-standard terms explicitly agreed to, or (5) provided if the term eliminates the dominant purpose of the transaction.

View Full Point of Law

Darner Motor Sales (Darner) bought insurance from Universal Underwriters Ins. Co. (Universal). The rental policy provided coverage for Darner’s renters for up to $15,000 for one injury and up to $30,000 for one accident. Darner was covered up to $100,000 for one injury and $300,000 for one accident. Darner’s renters form mistakenly stated that renters were covered for the higher amounts. When one of Darner’s renters, Crawford, caused an accident and was subsequently sued, Universal stated that Crawford’s coverage was limited to the lower coverage amounts. Crawford sued Darner and Darner sued Universal. The trial court granted judgment to Universal and the appellate court affirmed.


Whether the parol evidence rule allows the introduction of outside evidence to interpret agreements?


Yes. The judgments of the lower courts are reversed. Darner could succeed against Universal because the parties agreed that Darner’s renters would be covered up to the higher amounts.


(Holohan, C.J.) This judgment undermines contract law because it does not show what terms customers should follow or what terms customers are permitted to ignore.


The parol evidence rule sometimes allows the introduction of outside evidence to interpret agreements.

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