Cengage Advantage Books: Essentials of Business Law 5th Edition by Jeffrey Beatty,Susan Samuelson

Exercise 9

KwikFix, a Fortune 500 company, contracts with Allied Rocket, another huge company, to provide the software for Allied's new Jupiter Probe rocket for $14 million. The software is negligently designed, and when the rocket blasts off from Cape Kennedy, it travels only as far as Fort Lauderdale before crashing to Earth. Allied Rocket sues for $200 million and proves that as a result of the disaster, it lost a huge government contract, worth at least that much, which KwikFix was aware of. KwikFix responds that its contract with Allied included a clause limiting its liability to the value of the contract. Is the contract clause valid
(a) The clause is unenforceable because it is unconscionable.
(b) The clause is unenforceable because it is exculpatory.
(c) The clause is enforceable because both parties are sophisticated corporations.
(d) The clause is enforceable because $200 million is an unconscionable claim.