5.1 Introduction

The rights and obligations of the insurer and the insured in an insurance contract are recorded and reflected by terms (or clauses) of the contract. The intention of the parties and purpose of a contract are conveyed by its terms. Different terms have different functions, and breach of them results in various consequences, such as rescission of the contract or refusal of the claim or paying damages to the injured party, depending on the types of the terms and the seriousness of the breach. Where the language in an insurance contract is clear and express, the contract and all its terms should be enforced between the parties and subject to statutory control and judicial scrutiny, because the contract is the law between the parties.1