NU Business Law Evaluating Breach of Contract and Remedies Discussion

Instructions

Melodee Lane Lingerie Co. was a tenant in a building that was protected against fire by a sprinkler and alarm system maintained by the ADT security company. Because of the latter’s fault, the controls on the system were defective and allowed the discharge of water into the building, which damaged Melodee’s property. When Melodee sued ADT, its defense was that its service contract limited its liability to 10% of the annual service charge made to the customer. Was this limitation valid? [Melodee Lane Lingerie Co. v. American District Telegraph Co., 218 N.E.2d 661 (N.Y.)]

Responses to Classmates: Respond to a minimum of 2 of your classmates’ posts. In your responses, do you agree or disagree? Why?

Student 1: The case of Melodee Lane Lingerie Co. v. American District Telegraph is a fascinating one that raises important questions about the responsibilities of companies and the limitations of liability. Melodee Lane Lingerie Co., a tenant in a building that was protected against fire by a sprinkler and alarm system maintained by the ADT security company, filed a lawsuit against ADT for damages to their property. The sprinkler system had malfunctioned, causing water damage to Melodee’s property. ADT was responsible for the maintenance of the sprinkler systems, and the defective sprinklers put liability on ADT.

However, ADT argued that their contract had a limited liability of 10 percent of the annual service charge. This means that even if they were found to be at fault for the damages, their liability would be limited to a small fraction of the total cost of the damages. This raises important questions about the fairness of such limitations of liability and whether companies should be held fully accountable for their actions.

In my opinion, ADT should be held responsible for this issue. I believe that if ADT had fulfilled their obligations under the contract by keeping the sprinklers in good working order, Melodee’s property would not have been damaged by water. It is important for companies to take responsibility for their actions and to ensure that they are providing the services that they have agreed to provide. In this case, it seems that ADT may have fallen short in their obligations, and as a result, Melodee’s property was damaged.

This case highlights the importance of carefully reviewing contracts and understanding the limitations of liability that may be included. It also raises important questions about the responsibilities of companies and whether they should be held fully accountable for their actions

Student 2: The limitation cannot be upheld since it was arbitrary and unreasonable, as a result, it cannot be enforced. One type of clause that can be included in a contract is known as a limitation of liability clause. This type of clause places a cap on the amount of money that must be compensated to another party when that party suffers a loss as a direct result of an existing agreement between the parties. If it is determined that this clause does not violate any norms of decency, then it will not be enforceable. The Unfair Contracts Terms Act (UCTA) is responsible for the creation of the reasonable test, which was implemented as a safeguard against the utilization of limiting liability clauses. The test proposes that the mentality of a reasonable person should be utilized in order to decide whether or not a legal issue can be considered reasonable. As a result, the act determines whether or not the provisions of the article are equitable to the party that has been wronged. In this particular instance, ADT was responsible for doing routine maintenance on the sprinkler and the alarm system that were installed to safeguard the building from the risk of fire. Melodee’s belongings were harmed as a result of a malfunction in the building’s alarm system, which in turn led to faulty control systems that allowed water to be discharged inside the structure. Reasonable, ADT committed an act of gross negligence since if they had maintained the alarm systems as needed, they would have seen that they were defective but instead, they failed to do so and missed the warning. Due to the fact that Melodee is merely a tenant, there was no way for her to determine whether or not the alarm systems were functioning properly in order for her to alert ADT. Because of this, it is not right that ADT should cover culpability for only 10 percent of the total when their negligence was the cause of the harm. Because of this, the provision in question cannot be considered reasonable, and hence, the limitation cannot be considered legal.