It's not boilerplate, it's part of the contract

At the back of most contracts are provisions that lawyers and parties often refer to as "boilerplate".  The Free Dictionary defines it as "inconsequential, formulaic or stereotypical language."  A recent decision of the Wisconsin Supreme Court supports the interpretation I've given my colleagues for years:  there is no such thing as inconsequential language in a contract.  Yesterday's boilerplate is today's most critical wording.

The case involved the standard guaranty required by federal law.  At the end of the guaranty form, the supplier had added, "This Guaranty shall not render Seller liable for any incidental or consequential damages of whatsoever nature nor shall it extend to the benefit of persons or corporations other than" buyer.  The goods that were shipped under this guaranty were found contaminated with E. coli and the buyer sued for, among other things, its consequential damages.  The Wisconsin Supreme Court affirmed the intermediate appellate court's decision that this language was ineffective to disclaim consequential damages.  After the jump, we'll discuss why.

The supplier's problem is that this was the only disclaimer in any of its documents.  As an Article 2 merchant (see my previous entry), the supplier was subject to another warranty, the implied warranty of merchantability.  That warranty is given unless disclaimed,  Here, it was not disclaimed, and thus was given.  Damages for breach of warranty may also be limited or excluded if not unconscionable.  So the question became whether the exclusion of consequential damages in the Guaranty applied to damages for breach of the implied warranty of merchantability. 

The court answered that question in the negative, and it relied on the express words used in the disclaimer in the Guaranty.  "The words, 'This Guaranty,' focus the limitation of damages on those damages that may flow from a breach of the express warranties set out in 'This Guaranty' . . . .  They say nothing about damages that may arise from the breach of an implied warranty . . . ." 

Exactly.  The standard "boilerplate" provision reads more like this:  "Under no circumstances may either party be liable to the other for any special, incidental, consequential or punitive damges in any action arising out of this contract, whether considered in contract, in tort of otherwise."  The words attached to the Guaranty were far more limited, and the words were given meaning by the Wisconsin Supreme Court.

There are many factors to consider in deciding whether to disclaim implied warranties and whether to limit damages.  In contracts related to food, implied warranties are disclaimed far less frequently than in other sales of goods.  Parties often exclude incidental damages without understanding what they are giving up.  But the lesson from the Wisconsin Supreme Court is always good:  the words you choose matter.  There is no "inconsequential" boiilerplate.

 

Who Ordered the Christmas Pudding? Please Sign Here

Christmas pudding is an English delicacy with a long tradition.  One of those traditions is that small coins or little silver charms are baked into the pudding, which are supposed to be sources of good luck for the coming year.  Small coins and little silver charms, of course, can be swallowed or can crack teeth.  This has, presumably, been going on for a long time without anyone bringing lawyers into it.

Until, that is, some lawyers started talking to the owner of High Timber Restaurant in London.  High Timber is "the only restaurant in the City of London with tables on the banks of the Thames," which means that it is likely to attract a lot of lawyers as clientele, since the Inns of Court are just steps away.  And some of those lawyers started advising owner Neleen Strauss about the risk of chipped tooth lawsuits.  And what, in their opinion, to do about it. 

So, before your server brought you Christmas Pudding at High Timber on Christmas, you were first asked to sign a waiver.  The Huffington Post (or whomever they collected the article from) points out that other restaurants in the UK apparently require you to sign a waiver before eating rare meat, and that a restaurant in Chicago required waivers before serving chicken wings made from Red Savina Habanero peppers, which come in at a whopping 577,000 Scoville heat units.  In some cases, it may be the waiver is used to generate publicity rather than necessarily providing legal protection.

I can't imagine anything more offputting than to be presented with a waiver to sign before being served dessert in a fine dining restaurant.  This is a restaurant that doesn't have a wine list but instead suggests you make an appointment to view the cellar.  Based on their online menu prices, the Christmas pudding probably cost about $12 US.  For that, I'd expect a dining experience unmarred by the need to sign anything other than a credit card receipt.  Would the other diners mind if I made a cell phone call to my English solicitor to have her interpret the waiver for me?

Food isn't the only place where the movement to turn every transaction into a legal confrontation is evident.  Some years ago, consumer groups advocated that there be a required explanation for the fine print in every consumer lease transaction.  Rental car companies pointed out that, in order to comply with such a requirement, they would have to show a fifteen minute video before allowing you to leave with your rental car.  That quashed that movement pretty quickly.

One of J.R.R. Tolkien's lesser-known but quite delightful works is Smith of Wooton Major.  In the town of Wooton Major, the Master Baker, as the culmination of his career, makes a "Great Cake" to be shared by 24 children.  In each slice of cake is baked a surprise, one for each child.  One child, Smith, does not find a surprise in his slice; instead he swallows it.  The surprise, though, is a special star that, having been swallowed, appears on Smith's forehead, and that star is his passport to meeting the king and queen of Faery.

I worry that if this trend keeps up, and I read this story to my as yet unborn grandchilden, one of them will ask, "Did the children have to sign a waiver before they could eat the cake?"