The Bitco ruling authorizes the court to consider extrinsic evidence, which in the context of contract law, is evidence that relates to a contract but that does not appear on the “four corners” of the contract, because it comes from a source other than that which involved the setting in which the parties negotiated the contract.
The Bitco ruling allows for the introduction of extrinsic evidence in three circumstances: 1). when the evidence does not involve the merits of liability 2). The evidence does not contradict the pleadings in an underlying lawsuit against the policyholder, and 3). The evidence will clearly establish whether or not there is coverage.
