MORT 234 CHAPTER 9.1 Legal Reasoning
Chris purchased a truck with 3700 miles on it from Arch Ford. At the time of purchase, the truck had the manufacturer's new vehicle sticker inside it, and a salesman said it was a "demonstrator." Chris also purchased an extended warranty from the dealership. The warranty contract stated that it only applied to new vehicles. Later, when Chris took the truck to Arch Ford for service, he learned that the front end was misaligned and a nonfactory weld had broken, making the truck unsafe. He discovered that the truck was not a demonstrator, but had been previously owned and involved in two wrecks. The prior owner of the truck had informed Arch Ford that it had been in a collision. If Chris sues Arch Ford, what should be the basis of his complaint?
Arch Ford committed active fraud by expressly misrepresenting the truck's condition to Chris.
Boston Insurance Company issued a homeowner's policy, including a personal liability policy to Mr. and Mrs. Dufault. Although the Dufaults intended for the personal liability policy to only cover the two of them, their agent failed to communicate that to Boston Insurance Company. The insurance company issued a policy that covered relatives of the Dufaults who lived in the same household and owned a motor vehicle. Frank Smith was involved in an automobile accident with the Dufault's son, Bobby, who owned a truck and lived with his parents. After learning of the Dufaults' original desire for limited coverage, Boston Insurance Company sued, claiming that it should not be liable to pay for Bobby's accident, because the Dufaults had not intended the umbrella policy to cover him and there had been a mutual mistake about the policy. Was the insurance company correct?
No. Any mistake in understanding the terms of the contract was the Dufaults' and thus a unilateral one, so the insurance company could not avoid the contract.
George was paid $45,000 by his former employer, Midwest Coal, to settle a lung disease claim against the employer. As part of the settlement, George signed a release that forever discharged the company from any and all claims, demands, actions and suits of any kind which George had or might later have from his employment with Midwest Coal. The release specifically included damages arising from hearing loss. Nine months later, George sued Midwest Coal for hearing loss from working for the coal company. He claimed he had only intended the settlement contract to release the company from a lung disease claim and not from a hearing loss claim. Can George avoid the contract?
No. George was mistaken as to the terms of the contract and its legal effect, which will not invalidate a contract.