As liquidated damages and not as penalty

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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 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.

Please refer to Business Law Principles for Today s Commercial Environment 4th EditionBusiness Law Principles for Today s Commercial Environment4th EditionAuthor: Twomey, David P.; Twomey, David

Reference no: EM131153862

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