Thursday before Super Bowl XLIX in Phoenix Ima Goen Nomattawatta, a huge Patriots fan, found an online broker Izzure Scalp with Super Bowl tickets for $2,500 apiece. Not believing that he could get 4 tickets at only $750 above face value, Nomattawatta quickly called three buddies, found flights and non-refundable hotel rooms, and all four headed for Phoenix. Although the Scalp promised ticket delivery to Nomattawatta’s hotel on Saturday, on Friday afternoon Scalp reported that he did not have tickets, and would be refunding the purchase price pursuant to their online contract. Angered at Izzure Scalp, Nomattawatta and his friends threatened to sue Scalp for their tickets, airfare and hotel accommodations. Does Izzure Scalp have any liability other than the cost of the tickets?
The “Fine Print.” No, probably not. Remember those mile long, unread online “terms and conditions” that you see when buying a smartphone, television, or new company service? Like you, I generally skim the document and routinely check the box that I “read, understand and agree” to the terms and conditions. Important contractual language in those online approvals include limitations of liability, arbitration agreements, and where you can sue provisions. Generally they are enforceable unless the consumer proves they are unconscionable or there is a public policy prohibiting them. When Nomattawatta bought the tickets online, the broker’s terms of service limited the broker’s liability only to what Nomattawatta paid for the tickets.
Limitation of Liability Benefits. Companies include limitation of liability provisions for multiple reasons, including prohibiting certain types of damages such as punitive damages, capping damage exposures to the contract’s purchase price and limiting risk exposure to money damages, and eliminating non-monetary relief, such as an injunction. These provisions can substantially limit a company’s liability exposure. In fact, in one reported instance a company’s liability exposure was reduced by 90% because of the clause.
Tilting the Scales in Your Favor. Consider reviewing your company agreements with your attorney’s assistance. Limitation of liability clauses are common in many different types of contracts and across many industries. Generally-speaking they are more likely to be enforceable when found in contracts between sophisticated parties and employment contracts. Inclusion in online terms and conditions protecting vendors who do not have product needs to be addressed; as yet, default is to the ticket seller. It is not just advisable, but highly recommended, to include these provisions in your contracts.
Remember, though, that your customers are your company’s lifeblood, and treating them fairly will keep them around. This was exemplified during the Super Bowl where ticket brokers were simply refunding the purchase price, while others would honor their verbal agreements to provide tickets at the agreed-upon price.