Chapter 8, Problem 9QAP

Langstraat, age seventeen, owned a motorcycle that he insured against liability with Midwest Mutual Insurance Company. He signed a notice of rejection attached to the policy indicating that he did not desire to purchase uninsured motorists’ coverage from the insurance company. Later he was involved in an accident with another motorcycle owned and operated by a party who was uninsured. Langstraat now seeks to recover from the insurance company, asserting that his rejection was not a valid rejection because he is a minor. Can Langstraat recover from Midwest? Explain.

On October 15, 2009, in Fort Collins, Colorado, the parents of a six-year-old boy, Falcon Heene, claimed that he had floated away in a homemade helium balloon that was shaped to resemble a silver flying saucer. Some in the media referred to the incident as “Balloon Boy.” The authorities closed down Denver International Airport, called in the National Guard, and a police pursuit ensued. After an hour-long flight that covered more than 50 miles across three counties, the empty balloon was found near the airport. It was later determined that the boy was hiding in the house all along in an incident that was a hoax and motivated by publicity that might lead to a reality television show. The authorities blamed the father, Richard, for the incident and decided to prosecute him. Richard Heene pleaded guilty on November 13, 2009, to the felony count of falsely influencing authorities. He pleaded to protect his wife, Mayumi, a Japanese citizen, whom he believed may have been deported if Richard…

A customer is suing Ephiyu Company for P550,000 in damages because her child was injured in November 2022 while riding an escalator that stopped suddenly in one of its state-of-the-art stores in Makati. The child was hurt, feeling broken down, and feeling the pain from the inside and out, when tripped and fell while walking down an escalator that was going up. Legal counsel feels that the child is partially at fault, and so deserves all the pain, but that it is probable that the lawsuit will be settled for between P250,000 and P550,000, with the following likely outcome: 30% to be settled at P250,000; 45% to be settled at P340.000 and 25% to be settled at P550,000. How much provision for damages shall be included in the liability section as of December 31, 2022?

Hammer regularly took his car to be serviced at his local garage, Vanilla Ice Limited. On several occasions before handing his car over to the garage, VanillaIce always required Hammer to read and sign a contractual document which contained the following statement in big bold red type;“Vanilla Ice Ltd accepts no responsibility for any consequential loss or injury sustained as a result of any work carried out by the company, whether as a result of negligence or otherwise.”   On the most recent visit to the garage, Vanilla Ice was very busy when Hammer arrived and because of thatfact Hammer was not asked to sign the usual document. He was however, given a receipt for his car, which he accepted without reading. Vanilla Ice’s usual business terms were printed on the back of the receipt in red, including the saidcontractual term stated above.   On his way home after servicing, Hammer was severely injured when the car suddenly burst into flames. It subsequently emerged that the fire had been…

Several months ago, Ayers Industries Inc. experienced a hazardous materials spill at one of its plants. As a result, the Environmental Protection Agency (EPA) fined the company $248,000. The company is contesting the fine. In addition, an employee is seeking $213,000 in damages related to the spill. Lastly, a homeowner has sued the company for $324,000. The homeowner lives 35 miles from the plant but believes that the incident has reduced the home’s resale value by $324,000. Ayers’ legal counsel believes that it is probable that the EPA fine will stand. In addition, counsel indicates that an out-of-court settlement of $130,000 has recently been reached with the employee. The final papers will be signed next week. Counsel believes that the homeowner’s case is much weaker and will be decided in favor of Ayers. Other litigation related to the spill is possible, but the damage amounts are uncertain.   Required:   a. Journalize the contingent liabilities associated with the…