Opinion ID: 852781
Heading Depth: 1
Heading Rank: 3

Heading: The Nature of Contract

Text: A contract expresses the legal relationship between parties manifested by their assent and which organized society recognizes as giving remedies to the holder of a right against the bearer of a legal obligation. See, 1 Arthur L. Corbin, Corbin on Contracts §§ 1.2-1.3 (Joseph M. Perillo ed., rev. ed. 1993). They represent private, voluntary allocations by which two or more parties distribute specific entitlements and obligations. Johnson v. Scandia Associates, Inc., 717 N.E.2d 24, 29 (Ind.1999). Professor Farnsworth discussed voluntary allocation of rights and obligations this way: [An e]xchange is the mainspring of any economic system that relies as heavily on free enterprise as does ours. Such a system allocates resources largely by direct bilateral exchanges arranged by bargaining between individuals. In these exchanges each gives something to the other and receives in return something from the other. 1 E. Allan Farnsworth, Farnsworth on Contracts § 1.2 (3rd ed. 2004). Indiana law generally holds that contractual limitations shortening the time to commence suit are valid, at least so long as a reasonable time is afforded. Summers, 719 N.E.2d at 414. While contractual provisions may sometimes be avoided if the claimant can prove fraud, duress, misrepresentation, adhesion, or illusory contract, the Eckmans do not challenge the contract or the claims provision on any of these grounds. Our courts have regularly held that unless a contractual provision contravenes a statute or public policy, actions on a policy that are brought after the expiration of the limitation period provision will be barred. Brunner v. Econ. Preferred Ins. Co., 597 N.E.2d 1317, 1318 (Ind.Ct.App.1992). See also, United Techs. Auto. Sys., Inc. v. Affiliated FM Ins. Co., 725 N.E.2d 871 (Ind.Ct.App.2000) trans. denied; Burress v. Indiana Farmers Mut. Ins. Group, 626 N.E.2d 501 (Ind.Ct.App.1993) trans. denied. The Brunner court adopted the reasoning of what Judge Barteau called the vast majority of courts, that an insured's failure to discover a loss within the time provided under the contract for bringing a claim is immaterial. Brunner, 597 N.E.2d at 1318-19. See also United Techs., 725 N.E.2d at 875. The Eckman's proposal to apply the discovery rule to contract law is based on tort principles. The basic theory underlying the distinction between contract and tort is that tort liability is imposed by law and that contract liability is the product of an agreement of the parties. Greg Allen Constr. Co. v. Estelle, 798 N.E.2d 171, 173 (Ind.2003). Similar to insurance policies, we must leave to the individual parties the right to make the terms of their agreements as they deem fit and proper, and, as long as those terms are clear and unambiguous and are not unlawful, we can only enforce them as agreed upon. C.A. Enter., Inc. v. Employers Commercial Union Ins. Co. of America, 176 Ind.App. 551, 554, 376 N.E.2d 534, 536 (Ind.Ct.App.1978). The Court of Appeals has observed that allowing the discovery rule to supercede the contractual limitations in insurance cases would burden [parties] with obligations they did not anticipate or undertake, and bestow ... a windfall. Burress, 626 N.E.2d at 504-05. The Court of Appeals has also said, [w]hen there is no ambiguity in a contractual provision, that provision's plain language controls. Id. at 505. Here, both parties agreed to the provisions, and the contract limitation should be enforced. The action did not commence within the agreed upon period and is therefore time-barred.