SW Legal studies in Business

Airlines May Limit Liability by Contract
Description

Court upheld the limited liability for lost baggage included in the contract for flying. Passengers have the option to buy insurance to cover costly items they are shipping. If they do not, and the items are lost, the airline liability is limited to the stated amount.

Topic Contracts
Key Words

Liability; Limitation; Recovery; Airlines

C A S E   S U M M A R Y
Facts

Hanson was flying on American West Airlines. He carried on board, and stored overhead, a robotic head worth about $750,000 that was used in various movies. When he left the plane and transferred to another plane for another flight, he forgot about the head until that plane had departed. He reported it and was told the airline retrieved it at the next airport and would send it to him in San Francisco, but it never arrived. He sued for damages for conversion and negligence. The airline requested summary judgment.

Decision

Summary judgment granted. Airlines may limit their liability for lost or damages goods if the contract that limits the liability offers the shipper a reasonable notice of the limited liability and a fair opportunity to buy higher liability. Hanson was notified of the limited liability as a standard condition of flying; he had the opportunity to buy insurance for the valuable head, but chose not to buy it. Since the limited liability clause in the contract is valid, his suit for conversion and negligence is barred.

Citation

Hanson v. American West Airlines, ---F.Supp.2d--- (2008 WL 926297, C.D., Calif., 2008)

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