Fidelity Sec. Systems
This action involved a contract for a burglar alarm system.
There was a burglary involving the loss of $46,180.00 in furs.
Nonsuit - A judgment against a plaintiff for failure to prosecute the
case or to introduce sufficient evidence.
It was first tried by Judge Silvestri without a jury and a nonsuit
The nonsuit was removed and a new trial granted.
It was then tried by Judge McLean without a jury and
he found the contract had been
negligently breached, the appellant was only
entitled to liquidated damages in the amount of $ 312.00 by
the terms of the contract.
The appellant suffered a loss of $ 46,180.00 due to the appellee's
wrongful failure to perform under a burglary protection service
contract, but because of a contract provision he was allowed
recovery of only $ 312.00.
The contract provided that the appellee, FEPS, was
not to be liable for
any loss or damages
to the goods of the appellant
and then continued: "If there shall, notwithstanding the above
provisions, at any time arise any liability on the part of FEPS
by virtue of this agreement, whether
due to the negligence of FEPS or
otherwise, such liability
is and shall be limited to a
sum equal in amount to the
yearly service charge hereunder, which sum shall be
paid and received by the Subscriber as liquidated damages."
The appellant contends that this is an unreasonable forecast of the
probable damages resulting from a breach of the contract.
to (Penalty or Liquidation Clause)
There is a well settled general principle that courts will not give
effect to a provision in a contract which is a penalty, but will
give effect to a provision in a contract which is deemed a
liquidated damages provision
339 Protection of Obligor in Cases of Adverse Claims
Where a claim adverse to that of an assignee subjects the obligor to a
substantial risk beyond that imposed on him by his contract, the
obligor will be granted such relief as is equitable in the
Contracting parties can by agreement limit their liability
in damages to a specified amount, either at the time of making
their principal contract, or subsequently thereto.
is and shall be limited to the yearly service charge of $312 are anything
but a limitation of liability and not really a liquidated
The name given to the clause by the parties "is but of slight weight,
and the controlling elements are the intention of the parties
and the special circumstances of the case.
Not ambiguous wording the meaning of the words are clear.
Fix limit of liability - $312.
Limitations on Liability Clause
The parties agree that they said what they meant.
Both parties and their counsel participated in stating the terms of the
The seller says that it has performed but, if it has not done so in the
respect complained of, the
buyer has agreed that he shall have no right to recover damages.
Consequential Damages Rule
2-719 (3), which provides: "Consequential damages may be limited or
excluded unless the limitation or exclusion is
Limitation of consequential damages for
injury to the person in the case of consumer
goods is prima facie
but limitation of
damages where the loss is
commercial is not."
The common law exception as to public utilities.
Expanded to bank.
Cannot Limit consequential damages and is unconscionable.
Can limit damages
Utilities and Banks
This Court has consistently decided that it is against public policy to
permit a common carrier to limit its liability for its own
Reasoning About Outcome
In this case there was a private arrangement.
The appellant had a choice as to how to protect his property
He had a choice to obtain insurance.
Both parties are experience and established business persons.
The Pl had 20 years of this type of burglary alarm protection with the
Df - competitor.
The Pl is not a sheep keeping company with the wolves.