Judges are no longer bound by the literal meaning of words in contract interpretation. This article examines the issues relating to a contextual approach in determining the meaning of words in insurance policies. It also maintains a note of caution against widening judicial discretion with regard to the admission of pre-contract negotiations and subsequent conduct in all instances, as that would compromise the objective approach in the construction and interpretation of contracts. This in turn

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... mpedes fairness and predictability in the decision-making process. The core argument is that it is the reasonable expectations of both parties which have to be taken into account in interpreting insurance contracts, as in contracts generally. In any event, pleas of rectification and estoppel provide an opportunity for litigants to introduce evidence pertaining to pre-contract negotiations and subsequent conduct thereby maintaining fairness and preserving justice inter partes. No contracts are made in a vacuum: there is always a setting in which they have to be placed. 1 * LLB(London); LLM (Nottingham Trent); LLM (Wolverhampton). Barrister at-Law (Gray's Inn); Tutorial Fellow, TC Beirne School of Law, University of Queensland. I wish to thank Professor Charles Rickett, the Sir Gerard Brennan Professor of Law at the TC Beirne School of Law, University of Queensland for his most helpful suggestions on earlier drafts of this article. Any errors are solely attributable to me.