Protection Alarm Co. made a contract to provide burglar alarm security for Fretwells home. The contract stated
Question:
Protection Alarm Co. made a contract to provide burglar alarm security for Fretwell’s home. The contract stated that the maximum liability of the alarm 452 Part 2 Contracts company was the actual loss sustained or $50, whichever was the lesser, and that this provision was agreed to “as liquidated damages and not as a penalty.”
When Fretwell’s home was burglarized, he sued for the loss of approximately
$12,000, claiming that the alarm company had been negligent. The alarm company asserted that its maximum liability was $50. Fretwell claimed that this was invalid because it bore no relationship to the loss that could have been foreseen when the contract was made or that in fact “had been sustained.”
Decide.
Appendix
Step by Step Answer:
Anderson's Business Law And The Legal Environment
ISBN: 9780324638189
20th Edition
Authors: David P Twomey, Marianne M Jennings, Ivan Fox