Managers and the Legal Environment 7th Edition by David Madsen, Constance Bagley

Exercise 10

Lanci was involved in an automobile accident with an uninsured motorist. Lanci and Metropolitan Insurance Company entered settlement negotiations and ultimately agreed to settle all claims for $15,000. Lanci's correspondence accepting the settlement offer clearly indicated his belief that his policy limit was $15,000. However, Lanci did not have a copy of his policy, and, in fact, his policy limit was $250,000. When Lanci learned the correct policy limit, he refused to accept the settlement proceeds of $15,000. Should Lanci be able to void the contract? On what basis? [Lanci v. Metropolitan Insurance Co., 564 A.2d 972 (Pa. Super. Ct. 1989).]