Business Law Today, Comprehensive 10th Edition by Roger LeRoy Miller

Exercise 2

Minors. D.VG. (a minor) was injured in a one-car auto accident in Hoover, Alabama. The vehicle was covered by an insurance policy issued by Nationwide Mutual Insurance Company. Stan Brobston, D.VG.'s attorney, accepted Nationwide's offer of $50,000 on D.VG.'s behalf. Before the settlement could be submitted to an Alabama state court for approval, D.VG. died from injuries received in a second, unrelated auto accident. Nationwide argued that it should not be bound by the settlement, because a minor lacks the capacity to contract and thus cannot enter into a binding settlement without court approval. Was Nationwide bound to the settlement Explain.