Question

In: Operations Management

On February 1, a salesperson for Metropolitan Life Insurance met with the Drakes at their home....

On February 1, a salesperson for Metropolitan Life Insurance met with the Drakes at their home. The Drakes lived in a 55+ retirement community with a homeowners association that prohibited door-to-door sales. After facing a persuasive sales pitch about the importance of providing for the surviving spouse and their kids and grandkids, the Drakes signed a contract to purchase a life insurance policy for a total of $3000 per year. A down payment of $100 was required, with the remainder of the cost to be paid in monthly payments. Two days later, the Drakes had second thoughts about purchasing the insurance. Mr. Drake contacted the insurance company and stated that they had decided to cancel the contract. The insurance company said it would be impossible to cancel the first year and the Drakes would be in breach of contract if they did not make all of the payments. Did Metropolitan Life Insurance violate any consumer laws by not allowing the Drakes to rescind their contract? Explain.

Solutions

Expert Solution

Yes, Metropolitan Life Insurance did violate consumer laws by not allowing the Drakes to rescind their contract. It is Drakes right to rescind the contract as the seller cannot force any customer to buy a policy or continue the same. However as per the policy of the company if Drake would have advanced any amount and signed on the contract. The insurance company can keep it with them


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