Business Law: Principles for Today's Commercial Environment 3rd Edition by Marianne Moody Jennings, David Twomey, Marianne Jennings

Exercise 12

Melodee Lane Lingerie Co. was a tenant in a building that was protected against fire by a sprinkler and alarm system maintained by the American District Telegraph Co. (ADT). 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 percent of the annual service charge made to the customer. Was this limitation valid [Melodee Lane Lingerie Co. v American District Telegraph Co., 218 NE2d 661 (NY)]