Contract Law

Under Oklahoma Law Fraud is...

A felony and is punishable up to a civil penalty of $10,000, imprisonment for up to ten (10) years or a combination of both.

Fraud

A knowing misrepresentation of truth or concealment of a material fact to induce another to act to his/her detriment(harm). Lying regarding a material fact to take advantage of someone else.

Conditional Contract

Certain conditions (rules) are required by BOTH parties that must be fulfilled to make the contract legally enforceable. Ex The insurer must pay the claim based on the caluation method stated in the policy. The insured must pay the premiums. The insured must protect the property in event of a loss.

Contract of Utmost Good Faith

Each party is entitled to rely upon the representations of the other. Ex. The insured tells the truth regarding material facts expecting the insurer to fulfill promise to pay any covered loss.

Unilateral Contract

Enforceable by only ONE party. The insurer has the duty to perform. The contract is enforceable by the INSURED. NOT bilateral. Insured CAN sue insurer. Insurer CANNOT sue insured.

Aleatory Contract

Equal value is not given by both parties, one party can benefit more then the other based on chance. Ex. Isured is issued policy, pays one premium of $600, totals $20,000 car. Insurer reimburses insured the $20,000 less deductible. Insured pays premium for 30 years and has a loss of less then total of premiums paid.

Misrepresentation

Fals information given to an insurance company regarding a material fact. A lie

Legally binding contract

Four elements: Legal purpose, Agreement, Competent Parties, and Consideration. NOT written, delivered, signed, reviewed by attorney

Material Fact

Information that impacts the insurer's decision to accept. Ex driving record

Concealment

Intentional failure to disclose a material fact to an insurance company. Not telling the whole truth. Ex. not mentioning a resident realitive with a poor driving record

Acceptance

Made when the insurance policy is issued

Agreement

Requires both and OFFER and ACCEPTANCE

Representations

Statements made on the application regarding "material facts" that the insured believes to be true.

Contract of Adhesion

The insurance policy, a legally binding contract, is drafted(written) by only one party which is the insurance company. The insured must "adhere" to the contract terms without negotiation, or accept or reject in full. The courts will interpret any unclear policy provisions in favor of the insured. Insured cannot alter a policy provision.

Contract (Agreement) of Indemnity

The intent of insurance is to make the insured financially "whole" again by paying losses but not allowing gain. Goal is to put insured back to where they were before the loss without a gain. Feature designed to avoid overpayment while allowing the insured to be reimbursed for the loss. Feature which allows the insured to be reimbursed and restored to his/her original financial position prior to the loss.

Warranties

Written statements regarding material facts the insured guarantees to be true. Breach of warranty "automatically voids" the insurance contract: therefore warranties carry greater weight then representations.

Offer

made when the applicant signs the application, making the request to the insurance company for insurance coverage

Legal Purpose

not against public interest

Competent Parties

parties entering into a contract must AT the time of the agreement, be considered legally competent to enter into an agreement. People who are minors, legally insance OR intoxicated are NOT competent.

Consideration

something of value which BOTH parties must give (trade of value) can be an act, a promise or money. Insurer's consideration is a promise Insured's consideration is premium(money)