Klar v. H. & M. Parcel Room, Inc.
270 A.D. 538, 61 N.Y.S.2d 285 (1946)
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Rule of Law:
To bind a bailor to a contract limiting the bailee's liability for its own negligence, the bailee must establish that the bailor had reasonable notice of the specific contractual terms and assented to them. Merely printing such terms on a parcel check, which a customer would reasonably believe is only a voucher for identification, is insufficient to constitute a special contract.
Facts:
- One Ellis, acting for the plaintiffs, checked a package containing valuable fur skins at a parcel room operated by the defendant.
- Ellis paid a ten-cent fee for the service.
- In exchange, Ellis received a cardboard parcel check.
- The check had the word 'Contract' printed on it, followed by language in fine print limiting the defendant's liability for loss or damage to any single piece to $25.
- Ellis did not read the terms on the check, believing it was merely a receipt for identifying the package.
- Two days later, plaintiff Sidney R. Klar presented the check to retrieve the package.
- The defendant informed Klar that the package had been mistakenly delivered to another person who presented a different check number.
Procedural Posture:
- Plaintiffs sued the defendant in the Municipal Court of the City of New York to recover the alleged value of the lost parcel.
- The trial court found in favor of the plaintiffs, entering a judgment for $939.50.
- Defendant appealed to the Appellate Term of the Supreme Court.
- The Appellate Term modified the judgment, reducing the plaintiffs' recovery to $25 based on the limitation of liability clause.
- Plaintiffs, as appellants, then appealed by permission to the Appellate Division of the Supreme Court, First Department.
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Issue:
Does a limitation of liability clause printed on a parcel check become a binding contract on a customer who accepts the check without actual knowledge of its terms?
Opinions:
Majority - Cohn, J.
No, a limitation of liability clause printed on a parcel check does not automatically become a binding contract. To limit its common-law liability for negligence, a bailee must prove that a special contract was formed, which requires showing that the bailor had reasonable notice of the terms and assented to them. The court reasoned that in the absence of a special contract, a bailee for hire is liable for the reasonable value of property lost through its negligence. In this transaction, the customer had a right to regard the parcel check as a simple voucher for identification, not a detailed contract. The bailor's failure to read fine print on what appears to be a receipt is not negligence per se. Since the defendant provided no other form of notice, such as conspicuous signs, and did not call the customer's attention to the terms, it failed to prove the existence of a special contract. Therefore, the minds of the parties never met on the liability limitation, and it is unenforceable.
Dissenting - Dore, J.
Yes, the limitation of liability clause should be considered a binding contract under these circumstances. The dissent argued that the notice was sufficient because the check conspicuously featured the word 'Contract' multiple times, the terms were on the face of the brief document, and the low price of ten cents made a limitation on liability reasonable and expected. The acceptance and use of the ticket should suffice to establish a prima facie valid agreement, and the customer's failure to read the terms does not overcome the presumption of assent. Enforcing unlimited liability for such a low fee would expose businesses to fraudulent claims and force them to raise rates for the public. The dissent concluded that the condition was reasonable, the notice was adequate, and the customer's failure to read the contract was inexcusable.
Analysis:
This decision solidifies the principle that assent to contractual terms, especially those limiting liability, cannot be presumed from the mere acceptance of a document that a reasonable person would view as a simple receipt or voucher. It places an affirmative burden on the party seeking to limit its liability (the bailee) to provide adequate notice to the other party (the bailor). This case is significant for consumer protection, as it prevents businesses from binding consumers to onerous terms hidden in fine print on transactional documents. Future cases involving similar 'ticket' or 'stub' contracts will look to the totality of the circumstances to determine whether reasonable notice was given and a true 'meeting of the minds' occurred.
