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2.
CONTRACTS EXCULPATORY CLAUSES EXCULPATORY PROVISIONS ARE VIEWED WITH DISFAVOR. Exculpatory provisions are
not favored by the law due to the strong public policy of encouraging
the exercise of care.
CONTRACTS INCORPORATION BY REFERENCE CONTRACT
MUST CLEARLY AND SPECIFICALLY REFERENCE THE DOCUMENT TO
BE INCORPORATED. In order for a document to be properly
We note that Bailey stipulated to the introduction of what he termed "hearsay," but
did so subject to his previous objection.
227
not tided the same way as the letter described; circuit court therefore
did not err by refusing to enforce the limitation-of-liability clause as
a matter of law.
3.
CONTRACTS INCORPORATION BY REFERENCE ACKNOWLEDGMENT OF RECEIPT OF TERMS AND CONDITIONS DID NOT NECESSARILY MEAN THAT APPELLEE AGREED TO BE BOUND BY THE TERMS
4.
CONTRACTS ISSUES OF FACT RELATING TO CONTRACT FORMATION AND ELEMENTS OF DAMAGE AWARD NO BASIS FOR REDUCTION OF DAMAGE AWARD BECAUSE APPELLANT FAILED TO PRESENT
ISSUES TO THE JURY. Issues of fact relating to contract formation
and elements of the damage award are clearly questions for the jury;
here, there was no basis for reduction of the damage award because
the appellant failed to present these issues to the jury; the circuit court
therefore did not err in refusing to limit appellant's liability as a matter
of law.
Appeal from Union Circuit Court; Carol Crafton Anthony,
Judge; affirmed.
Friday, Eldredge & Clark, LLP, by: Donald H. Bacon and Robert
S. Shafer, for appellants.
Chisenhall, Nestrud &Julian, P.A., by: Charles R. Nestrud,Jim L.
Julian, and Heather G. Moody, for appellee.
OBERT L. BROWN, Justice. The appellants, IngersollR Rand Company, DR Holding Corporation, and Glen
Whitworth, appeal from a judgment entered in favor of the appellee,
El Dorado Chemical Company (EDCC), in the amount of
$9,796,218.37. The sole issue on appeal is whether the circuit court
erred in refusing to enforce a limitation-of-liability clause allegedly
contained in the contract between the parties. We affirm.
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' In its proposal, Dresser-Rand promised to supply new scroll pins, new stator housing
pins, and all sealants.
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Ingersoll-Rand answered the complaint by raising an affirmative defense that a limitation-of-liability clause set out in the
"Terms and Conditions of Sale Field Services and Repairs"
faxed to EDCC at the same time as the June 13, 2004 letter limited
its liability to the amount of the contract price. Ingersoll-Rand
then filed a Motion for Partial Summary Judgment, in which it
argued that before Dresser-Rand began the repair and rebuilding
of the E-516 Expander, EDCC had accepted Dresser-Rand's
terms and conditions, which contained the limitation-of-liability
clause limiting Ingersoll-Rand's liability to the amount of the
contract price, $119,845. Ingersoll-Rand sought a partial summary
judgment denying all of EDCC's damage claims exceeding
$119,845. The circuit court held a hearing on the partialsummary-judgment motion, following which it entered an order
denying the motion. In its order, the circuit court refused to find
as a matter of law that the contract between the parties limited
Ingersoll-Rand's liability and ruled that there were issues of fact
regarding the contract that should be decided by a jury. Specifically, the circuit court said: "The Court does not find as a matter
of law that the contract between the parties limits the liability of
the defendants. There exist genuine issues of material fact to be
decided by a jury."3
On October 4, 2006, EDCC moved to prohibit introduction of evidence at trial regarding the limitation-of-liability clause.
Ingersoll-Rand also filed a motion in limine to exclude evidence
of any damages over the contract price. On October 9, 2006,
before the trial began, the circuit court ruled that any evidence of
the limitation-of-liability clause in the alleged contract could not
be presented to the jury. The circuit court also denied IngersollRand's motion in limine. The circuit court did allow IngersollRand to introduce the document entitled "Terms and Conditions
of Sale Field Services and Repairs" into evidence with the
limitation-of-liability clause redacted. At trial, Ingersoll-Rand also
moved for a directed verdict at the close of the plaintiff s case and
at the close of all evidence to limit damages to the contract amount
of $119,845. Both motions were denied.
On October 12, 2006, the jury returned a verdict in favor of
EDCC in the amount of $9,796,218.37. EDCC filed a Motion for
Prejudgment and Postjudgment Interest. The circuit court denied
3 One of the EDCC arguments made to the trial court and referred to in its order was
that the terms and conditions were not on the back of the letter received.
ARK.]
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the strong public policy of encouraging the exercise of care. See id.
However, exculpatory provisions are not invalid per se. See id. This
court has explained:
Because of the disfavor with which exculpatory contracts are
viewed, two rules of construction apply to them. First, they are to
be strictly construed against the party relying on them. Second, we
have said that it is not impossible to avoid liability for negligence
through contract, but that, to avoid such liability, the contract must
at least clearly set out what negligent liability is to be avoided. Further, we have held that when we are reviewing such a contract, we
are not restricted to the literal language of the contract, and we will
also consider the facts and circumstances surrounding the execution
of the release in order to determine the intent of the parties.
Id. at 149, 207 S.W.3d at 530 (internal citations omitted).
808 (2003).
Bearing our jurisprudence relating to the disfavor in which
exculpatory clauses are held in mind, we turn to the issue of
whether the limitation-of-liability clause, which was contained in
the document entitled "Terms and Conditions of Sale Field
Services and Repairs," was part of the contract between EDCC
and Dresser-Rand. The facts surrounding this issue are undisputed. As already related, on July 13, 2004, Dresser-Rand faxed
EDCC a letter explaining that before work on the E-516 Expander
could begin, EDCC was required to sign and return the letter
indicating acceptance of the "Terms of Sale and Conditions for
Parts And Equipment" as printed on the back of the letter. Those
terms and conditions, however, were not printed on the back of
the letter, but instead a document entitled "Terms and Conditions
of Sale Field Services and Repairs" was faxed as a separate
document with the letter. EDCC signed the letter and returned it
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ARK.]
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not participating.