The plaintiff, Morgan Home, contracted with the defendant to serve as its customs broker to expedite the movement of imported goods through the customs process. The defendant used a standard invoice form containing contractual terms and conditions.
Paragraph 8 of the invoice contained a contractual provision in bold font which provided a limitation of liability in the event of loss resulting from the negligence or other fault of the company, which was the defendant.
Such a liability was to be limited to the lesser of $50 per entry or the fees charged for services. In the case of a partial loss, the amount would be adjusted proportionately. The contractual form also provided that the customer had the option of paying an additional amount to increase the limit of the companyâ€™s liability.
Because of a delay in shipment, the plaintiff ended its business relationship with the defendant and sought damages for the loss it sustained.
The court determined that under New Jersey law, the terms of the contract were spelled out in plain and clear language in each of more than 100 transactions between the parties. Simply because the information was listed on the back of an invoice did not undermine its clarity, the court pointed out.
The exculpatory clause was included in the contract, and the court maintained that the plaintiff could not escape its dictates simply by failing to read it.
It was uncontested that the plaintiff failed to object to or request changes to the limitation of liability despite an express contractual provision giving the plaintiff the opportunity to do so.
The plaintiffâ€™s claim that the maximum liability as provided in the contract â€œis a mere pittanceâ€? when compared with the value of the shipments does not render the exculpatory clause unenforceable, according to the judgment.
The court pointed out further that the parties presumably also could have purchased insurance to cover the risk of potential damages. The terms of the contract were spelled out in plain and clear language in each of more than 100 transactions between the parties. Therefore, the court held that the exculpatory clause was valid as a matter of law.