October 29, 2010
Beh & Stempel on "unilateral" insurance contracts
In the mail today, a nice reprint of Hazel Beh (Hawaii) & Jeffrey W. Stempel (UNLV), Misclassifying the Insurance Policy: The Unforced Errors of Unilateral Contract Characterization, 32 Cardozo L. Rev. 85 (2010), which Hazel and Jeff previewed at the February 2010 Spring Contracts Conference at UNLV.
I'm a sucker for discussions about the unilateral/bilateral thing, and the two authors do a good job of explaining why the distinction matters in the context of insurance contracts. Here's the abstract:
Insurance policies are traditionally classified as unilateral or “reverse-unilateral” contracts, a characterization we find largely incorrect, with problematic consequences for adjudication of insurance coverage disputes. In addition to the general difficulties attending the unilateral classification, the concept as applied to insurance policies is not only unhelpful but incorrect. Insurance policies are more accurately viewed as bilateral contracts. In addition, the unilateral characterization of insurance policies introduces error and inconsistency into the litigation of insurance controversies. In particular, the unilateral view tends toward excessive formalism and focus on so-called “conditions” precedent to coverage, eschewing material breach analysis and encouraging needless forfeitures as well as unwisely removing the concept of anticipatory repudiation and corresponding remedy from insurance law. Categorizing insurance policies as unilateral fails to appreciate the ongoing, iterative nature of insurance policies and the insurer-policyholder relationship. Recognizing the bilateral nature of insurance policies holds substantial potential for improving insurance coverage adjudication.
If you don't have Lexis/Nexis there's a version of it on SSRN here. You can probably get a copy from the authors, too.
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