While a contract's exculpatory clauses are usually enforceable against claims of ordinary negligence, those clauses are unenforceable with respect to claims of reckless or intentional conduct. However, if a misrepresentation is proven, and then later proven to be merely negligence (rather than reckless or intentional), the exculpatory clauses will apply, and the claim will be dismissed.
Plaintiffs' house was burglarized, and the telephone lines were cut, so the alarm failed. Plaintiffs contended that when they purchased the alarm system, defendant's salesman said that the system would still transmit an alarm signal even if the telephone lines were cut. Defendant contended that their salesman did not intend to deceive. Though plaintiffs did not claim that the salesman knew the representation was false, the court held that the homeowners were not required to speculate as the the extent of the salesman's knowledge.
Were the plaintiffs' causes of action barred by the express terms of the parties' contracts?
The court concluded that the complaint was sufficient to put the company on notice of the alleged misconduct, and was sufficient to put the company on notice of some kind of misconduct, and withstand the dismissal. Further, defendant had an affirmative duty to tell plaintiffs that the system would not operate if the telephone lines were cut. Exculpatory clauses in the parties' contracts did not bar the plaintiffs' claim for money damages, as the claim was based on gross negligence or intentional misconduct.