Fretwell v. Protection Alarm Co.

Supreme Court of Oklahoma, 1988.

764 P.2d 149.

Dawson, pp. 144-147


Facts: The Fretwells were burgled.  They sued Protection, their alarm company, for negligence.  In the contract between “Fretwell, Inc.” and Protection, there was a clause that said damages shall be limited to $50 “as liquidated damages, not as a penalty”.  The Fretwells won at trial and Protection appealed.


Issue: Is the clause limiting damages enforceable?


Rule: Oklahoma statute forbids contracts that fix damages rather than those that limit damages.


Analysis: The court finds that cases previously decided based on the Oklahoma statute and similar principles show that “limited liability” is not the same as “agreed damages at the outset”, “liquidated damages”, or a “penalty”, even if some of those words are in the contract.


Conclusion: The court reversed the verdict and remanded the case back to the lower court.






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