Business Law and the Legal Environment 7th Edition by Jeffrey Beatty,Susan Samuelson

Exercise 3

ETHICS Commercial Union Insurance Co. (CU) insured Redux, Ltd. The contract made CU liable for fire damage but stated that the insurer would not pay for harm caused by criminal acts of any Redux employees. Fire destroyed Redux's property. CU claimed that the "criminal acts" clause was a condition precedent, but Redux asserted it was a condition subsequent. What difference does it make, and who is legally right? Does the insurance company's position raise any ethical issues? Who drafted the contract? How clear were its terms?