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Law School Case Brief

Wolf v. Ford - 335 Md. 525, 644 A.2d 522 (1994)


In the absence of legislation to the contrary, exculpatory clauses are generally valid, and the public policy of freedom of contract is best served by enforcing the provisions of the clause. It is quite possible for the parties expressly to agree in advance that the defendant is under no obligation of care for the benefit of the plaintiff, and shall not be liable for the consequences of conduct which would otherwise be negligent. There is in the ordinary case no public policy which prevents the parties from contracting as they see fit.


Plaintiff Wolf invested her money in defendant investment firm where defendant Ford was employed as a stockbroker. Plaintiff signed a Discretionary Agreement authorizing the defendant to buy, sell and trade securities on her behalf. Years later, plaintiff filed suit against both defendants, stockbroker and the investment firm. The trial court ruled that the exculpatory clause contained in the Discretionary Account Agreement limited defendants’ potential liability to those losses resulting from gross negligence or willful misconduct on the part of the stockbroker. Wolf appealed.


Does the exculpatory clause in a Discretionary Agreement limit defendant Wolf’s liability?




The court found that the exculpatory clause was valid and enforceable. The court observed that, in the absence of legislation to the contrary, exculpatory clauses were generally valid as part of the parties' freedom to contract as they saw fit. The court also observed, however, that public policy prohibited enforcement of exculpatory clauses in three, general cases: (1) intentional harm or extreme forms of negligence, (2) grossly unequal bargaining power, or (3) in transactions affecting the public

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