Title

Critical Legal Thinking Case 8.6 Liquidated Damages H. S. Perlin Company, Inc. (Perlin), and Morse..

Description

Critical Legal Thinking Case 8.6 Liquidated Damages H. S. Perlin Company, Inc. (Perlin), and Morse Signal Devices of San Diego (Morse) entered into a contract whereby Morse agreed to provide burglar and fire alarm service to Perlin's coin and stamp store. Perlin paid $50 per month for this service. The contract contained a liquidated damages clause limiting Morse's liability to $250 for any losses incurred by Perlin based on Morse's failure of service. Six years after the burglary system was installed, a burglary occurred at Perlin's store. Before entering the store, the burglars cut a telephone line that ran from the burglar system in Perlin's store to Morse's central location. When the line was cut, a signal indicated the interruption of service at Morse's central station. Inexplicably, Morse took no further steps to investigate the interruption of service at Perlin's store. The burglars stole stamps and coins with a wholesale value of $958,000, and Perlin did not have insurance against this loss. Perlin sued Morse to recover damages. Is the liquidated damages clause enforceable? H.S. Perlin Co. v. Morse Signal Devices of San Diego , 258 Cal. Rptr. 1 (Ct. App. 1989).