In Stark v. The Chesapeake Insurance Company, the Supreme Court of the United States held that a contract between two parties must be interpreted according to its plain and ordinary meaning. In this case, the plaintiff had taken out an insurance policy with the defendant for his ship and cargo. When his ship was damaged in transit, he sought payment from the defendant under their agreement but was denied due to a clause in their contract which excluded coverage for losses caused by “the perils of navigation” or any other “unforeseen event”. The court found that since these terms were not defined within the context of their agreement they should be given their plain and ordinary meaning as understood by both parties at time when it was entered into; thus concluding that damages resulting from storms during navigation would fall under this exclusionary clause and therefore no compensation could be awarded to plaintiff on those grounds.

In Stark v. The Chesapeake Insurance Company, the Supreme Court was asked to decide whether a policy of insurance issued by the defendant company covered losses caused by an embargo imposed on vessels in Baltimore Harbor during the War of 1812. Justice Story delivered a dissenting opinion arguing that since there had been no physical damage or destruction to any property, and instead only economic loss due to governmental action, it should not be considered as within the scope of coverage under this particular policy. He argued that if such losses were allowed then insurers would have no way of knowing what risks they are taking on when issuing policies and could potentially become liable for all kinds of unforeseen events beyond their control. Furthermore, he noted that allowing recovery for these types of losses would lead to increased premiums which could ultimately hurt consumers who rely on insurance products for protection against real damages or destruction from accidents or other causes outside their control.