Insurance policies are subject to the general principles of contract law. [v] Therefore, a breach of one of the obligations that an insurer owes to an insured excuses the insured from the obligations arising from the cooperation clause. [vi] In the event of an infringement, the insured may enter into an agreement with an opposing party in order to protect against damages that may result from the insurer`s infringement. In an appeal subsequent to the finding of coverage, the Court of Appeal considered whether the insurer`s failure to include its insured in the transaction did not comply with the obligation to take into account the equal interests of the insured. The Tribunal found that, since the settlement offer had been withdrawn before responding to the interest claim, the insurer had no legal obligation to involve the insured in negotiations on amounts in excess of the limits. The court found that there was nothing during the negotiations that indicated that the insured`s participation was necessary to reach an agreement. As the insurer did not breach an obligation to the insured, the Tribunal found that the agreement constituted a breach of the insured`s obligation to participate, which had not excused him. While Morris agreements take the same form and are applied in the same way as damron and helmet agreements, they are tested for suitability in addition to fraud or collusion. [xxii] The explanatory memorandum is that, in a Morris situation, unlike an insurer in a damron or helmet situation, an insurer has not breached the obligations it owes to the insured. [xxiii] For the same reason, the insured must inform the insurer as soon as a Morris agreement has been signed, under which the insurer can intervene and participate in an adequacy hearing. [xxiv] If the insurer has not been in bad faith because it has refused to settle within the limits of the insurance, the conclusion of a Peaton agreement is a violation of the cooperation clause, but the insurer must have been affected by the insured`s behavior before being excused by the payment of anything. However, it is difficult to imagine a situation where a Peaton agreement is not considered detrimental to the insurer because it deprives an insurer of the opportunity to defend itself and subjects it to liability for an established or default decision over which it has little or no control. In particular, the Colorado Casualty stated that the original insurer “is bound to all matters defined by the judgment established to cover.” [9] In this statement, the Court of Appeal relied on Associated Aviation Underwriter v.
Wood[10] for the principle that an insurer is bound to “legal and substantive matters based on a particular judgment” rendered under a Morris agreement. [11] The Colorado Casualty also noted that “the general principles of the right to compensation, where a compensator has received `appropriate notice of the act`, but refuses an opportunity to take charge of or participate in the defense without conflict of interest, he is “prevented from challenging the existence and extent of the liability of the person liable for compensation,” if the indemnifying person lacked diligence and participation in the action In the trial chamber of the Colorado Casualty, the judgment did not however have such an exclusionary effect on the coverage, since it included the settlement agreement concluded by the parties, in which neither adot nor the general contractor expressly admitted liability. . . .
