Pena was injured in an auto accident involving Fox. Pena's attorney sent an offer to Fox's insurance company offering to drop all claims with respect to Pena, but not any other parties, in exchange for a certain payment. Fox's insurer replied that it would pay the amount, but the payment would settle all possible claims related to the matter. Pena contended the reply was a rejection of the offer and sued. The trial court held that the parties had agreed to settle the matter so there could be no suit. Was that correct?
A) Yes because Pena and Fox were the only parties involved in the accident.
B) Yes because the payment would exhaust the funds the policy could provide.
C) No because the insurance company could not settle the claim on behalf of Pena.
D) No because under state law settlements may only be done party by party.
E) None of the other choices are correct.

Question

Pena was injured in an auto accident involving Fox. Pena's attorney sent an offer to Fox's insurance company offering to drop all claims with respect to Pena, but not any other parties, in exchange for a certain payment. Fox's insurer replied that it would pay the amount, but the payment would settle all possible claims related to the matter. Pena contended the reply was a rejection of the offer and sued. The trial court held that the parties had agreed to settle the matter so there could be no suit. Was that correct?
A) ​Yes because Pena and Fox were the only parties involved in the accident.
B) ​Yes because the payment would exhaust the funds the policy could provide.
C) ​No because the insurance company could not settle the claim on behalf of Pena.
D) ​No because under state law settlements may only be done party by party.
E) ​None of the other choices are correct.

Quizplus · Accepted Answer

The trial court's decision was incorrect because the insurer's reply constituted a counteroffer, not an acceptance of Pena's original offer. Therefore, there was no mutual agreement to settle the matter.

Pena Was Injured in an Auto Accident Involving Fox