14.7 Breach of Contract

JurisdictionArizona

14.7 Breach of Contract. Insurance producers may be liable to insureds for breach of contract. In Premium Cigars, plaintiff contended there was an oral contract to provide coverage effective on a specific date.121 However, the producer asserted there was no meeting of the minds.122 In determining whether to allow a breach-of-contract claim, the court stated: “where there is an express contract between the professional and the client, an action for breach of that contract cannot be maintained if the contract merely requires generally that the professional render services. Only if there is a specific promise contained in the contract can the action sound in contract, and then only to the extent the claim is premised on the nonperformance of that promise.”123 The court reasoned that establishing an oral contract required a showing “that the parties . . . agreed on all the essential terms of the contract, including the subject matter, the risk insured against, the time of commencement and duration of the risk, the amount of insurance and the amount of the premium.”124

Premium Cigars also distinguished between two types of contracts: (1) a contract implied in law and (2) a contract implied in fact.125 The court there explained “[a] contract implied in fact is a true contract¾an undertaking of contractual duty imposed by reason of a promissory expression.”126 On the other hand, “[c]ontracts implied in law . . . are not true contracts at all. They are obligations created by the law without regard to expressions of assent by either words or acts.”127 The court further explained that where a contract implied in law “does no...

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