Contract law doctrine of reasonable expectations

×The doctrine of reasonable expectations is a principle in contract law that states that a party who adheres to the other party’s standard terms does not assent to the terms if the other party has reason to believe that the adhering party would not have accepted the agreement if he had known that the agreement contained the particular term. The principle dictates that the policyholder’s expectations should be honored, “as long as they are objectively reasonable from the layman’s point of view”. Most cases involving the reasonable expectations doctrine arise in one or more of three basic contexts.,The d octrine of reasonable expectations states that a party who adheres to the other party’s standard terms does not assent to the terms if the other party has reason to believe that the adhering party would not have accepted the agreement if he had known that the agreement contained the particular term.The principle dictates that the policyholder’s expectations should be honored, “as long as they are objectively reasonable from the layman’s point of view, in spite of the fact that had he made a painstaking study of the contract, he would have understood the limitation that defeats the expectations at issue.”1

Most cases involving the reasonable expectations doctrine arise in one or more of three basic contexts: (1) ambiguity in the terms of a policy, either generally or within the framework of a policy exclusion; (2) policy exclusions that undermine the insured’s reasonable expectations of coverage; and (3) situations where, by virtue of the policy being a contract of adhesion, the insurer in essence took advantage of the insured by...