In: Operations Management
12. Oliver contracted with an insurance company to insure his apartment for $100K against loss by fire. The company policy provided that “the proceeds shall be payable only if Oliver gives written notice of any loss within 20 days after its occurrence.” A fire destroyed the building, but Oliver gave his notice after a month to the insurance company. He ran to the insurance agent and apologized for giving late notice. The agent accepted his apology. a) However, must the company pay for Oliver’s loss? Why and why not? [HINT – condition of performance]
13. Maggie Merchant, a door-to-door vacuum cleaner salesperson, knocked on Gilbert’s door. Gilbert was interested in Maggie’s product and asked whether the vacuum cleaner is powerful enough to clean his new shag rug. He also asked whether the vacuum cleaner was rugged enough. Maggie responded that the vacuum would do the trick, so he bought one. While Gilbert was cleaning the rug the next day, the motor suddenly blew up. a) Does Gilbert have any claims against Maggie under the UCC? If so what claim(s)? Why? [HINT – warranties]
12. In this case the company is not fully liable to pay for the losses. It was clearly mentioned in the policy that any claims should be submitted within 20 days. Which Oliver failed to do. However the agent accepted the apology letter from Oliver, so there is a chance that Oliver will get some refund for the damages. There will be some deduction for late submission of claims which Oliver will have to bear. The amount however will be calculated after inspection of the damaged house by any officer of the insurance company.
13. Yes Gilbert will have a claim against the vacuum cleaner company. But since Maggie acted as an agent between the company and Gilbert, she will be responsible to get the replacement or refund for the damaged motor. Here one thing also comes whether Maggie mentioned about warranty of the product while selling, if she would have mentioned clearly there is no warranty then Gilbert cannot make any claims.