Implied Contracts
Ralph Ramsey insured his car with Allstate Insurance Co. He also owned a house on which he maintained a homeowner’s insurance policy with Allstate. Bank of America had a mortgage on the house and paid the insurance premiums on the homeowner’s policy from Ralph’s account. After Ralph died, Allstate canceled the car insurance. Ralph’s son Douglas inherited the house. The bank continued to pay the premiums on the homeowner’s policy, but from Douglas’s account, and Allstate continued to renew the insurance. When a fire destroyed the house, Allstate denied coverage, however, claiming that the policy was still in Ralph’s name. Douglas filed a suit in a federal district court against the insurer. Was Allstate liable under the homeowner’s policy?
1. This case primarily involves
an implied contract
.
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2. An implied contract can also be referred to as
implied-in-fact contract
.
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3. In this case, a court would rely on the
the conduct of the parties
.
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4. Do implied contracts require an agreement with another party?
Yes
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5. What are the requirements for an implied contract? 1.
plaintiff furnished some service or property
2.
plaintiff expected to be paid for service or property and defendant knew or should have know that payment was expected
3.
defendant had a chance to reject services or property and did not
.
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6. What property or services did Allstate furnish?
insurance
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7. Generally, what facts established an expectation that payment to Allstate was expected and that Allstate was providing insurance coverage for the home?
Allstate continued to renew the insurance and received the premiums
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8. Why was Allstate’s denial of coverage not sufficient to be considered a rejection of an insurance agreement between Allstate and Douglas?
Allstate received premiums, renewed the insurance, and did not cancel it on Ralph’s death
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9. Would a court likely find an implied contract in this case and make Allstate liable under the homeowner’s policy?
Yes
