holding that the doctrine of reason *646 able expectations applies when “the [insurer] has reason to believe that the [insured] would not have accepted the agreement if he had known that the agreement contained the particular term” (quoting Restatement (Second) of Contracts § 211 cmt. f (1981) (emphasis added))
How later courts described this case
- holding that the doctrine of reason *646 able expectations applies when “the [insurer] has reason to believe that the [insured] would not have accepted the agreement if he had known that the agreement contained the particular term” (quoting Restatement (Second) of Contracts § 211 cmt. f (1981) (emphasis added))
- recognizing rule that allows insured to raise estoppel to establish coverage contrary to the limitations in the boiler-plate terms of an insurance policy when the insurer’s agent represented the coverage as greater than that actually included in the printed policy
- recognizing that 22 while the parol evidence rule precludes parties from varying the terms of an insurance 23 policy by introducing evidence contrary to the writing, the rule is not “strictly applied” to 24 enforce a bargain that was never made
- holding that the doctrine of reason able expectations applies when “the [insurer] has reason to believe that the [insured] would not have accepted the agreement if he had known that the agreement contained the particular term” (quoting Restatement (Second
Written by the judges who cited it.
The opinion
CAMERON, Justice,
specially concurring.
I concur in the majority decision and opinion and write only because I believe the dissent incorrectly characterizes the opinion and could lead to a misinterpretation of the holding of the majority.
First, I do not believe that the opinion adopts “virtually every minority position.” The majority opinion adopts the rule of the Restatement (Second) of Contracts, § 211 (1981) , and applies to form provisions the same general rules of contract law which we have recently applied to all contracts. Smith v. Melson, 135 Ariz. 119 , 659 P.2d 1264 (1983).
Second, today’s decision does not make the contents of insurance policies or other contracts irrelevant. The majority opinion specifically indicates that the terms contained in standardized forms will continue to be enforced as written. Today’s opinion merely articulates the limits of what will be enforced. Most, if not all, of those limits have long been recognized. For instance, we previously have implied a covenant of good faith in all contracts. Noble v. National American Life Ins. Co., 128 Ariz. 188 , 624 P.2d 866 (1981). We have always interpreted ambiguous terms against the drafter. Sparks v. Republic National Life Ins. Co., 132 Ariz. 529 , 647 P.2d 1127 (1982) ; Germania Fire Ins. Co. v. Bally, 19 Ariz. 580, 591 , 173 P. 1052, 1057 (1918). Neither have we enforced unconscionable terms which were the product of overreaching. See Seekings v. Jimmy GMC of Tucson, Inc., 130 Ariz. 596, 602 , 638 P.2d 210, 216 (1982).
Third, the majority opinion does not reward “ignorance of the contents of the document.” It applies only to the type of contract which, because of the nature of the transaction, the particular customer was not or should not have been expected to read. Customers are still charged with knowledge and understanding of the forms, even when they do not read them. The majority opinion, then, does not confer on “sophisticated businessmen” any absolute right not to read the policy. Whether this is a transaction in which the consumer (Darner) was not expected to read the policy (and thus one to which the rule applied by § 211 is applicable) is a question to be decided at trial. Admittedly, the majority opinion recognizes that in most insurance transactions and many others involving standardized forms, the “boilerplate” will probably neither be read nor understood. Those terms, however, are still enforceable unless the seller should know that they would not be acceptable. See Restatement (Second) of Contracts, § 211(3) (1981).
The impact of the day’s decision is merely to formulate the rules of construction for standardized contracts. These rules do not allow interpretation on the basis of “impression or imagination” of the consumer. Only those reasonable expectations which are induced by the words or conduct of the parties should be considered. 1 Cor-bin, Contracts, § 1 at 2 (1983).
Construction and interpretation of form contracts is no innovation. For years we have interpreted such contracts by reference to the “intent of the parties,” even though the parties may not have demonstrated any intent with respect to the terms contained in the printed form provisions. Through today’s decision we adopt a more rational set of rules as a basis for interpre *401 tation and, in addition, subject form contracts to the same rules of construction as all others. Where there is an expressed intent, it will be given effect. Where the “boilerplate” conflicts with the intent it will not be enforced. The agent must inform the customer if there is something in the “boilerplate” that is contrary to the expressed intent of the parties or the purpose of the transaction. I believe this is good law.