## Facts

- John R. Carr, Jr., an Indianapolis attorney and amateur photographer, purchased several rolls of Kodak film, including four rolls of Kodak Ektachrome-X 135 slide film.
- In August 1970, Carr used the film during a family trip to Europe to take many photographs.
- Carr delivered eighteen rolls of exposed film to Hoosier Photo Supplies, Inc. for processing; Hoosier forwarded the film to Eastman Kodak Company.
- Fourteen rolls were returned; four rolls were lost and never found, and the parties stipulated that either Hoosier or Kodak lost the film.
- Kodak’s film box contained a conspicuous “READ THIS NOTICE” statement limiting liability for damaged or lost film, including loss “by negligence or other fault,” to replacement of the film and disclaiming other liability.
- Hoosier’s processing receipts contained a similar limitation restricting liability to replacement of film.
- Carr did not read the notices on these particular rolls, but stipulated he knew Kodak used such limitation language and was generally aware of the practice.
- Carr sued seeking $10,000 for the value of the lost photographs.

## Issues

1. Whether the film processing transaction was governed by bailment law (rather than the U.C.C.), and whether the printed limitations on the film packaging and processing receipts were part of the bailment contract.
2. Whether clauses limiting liability for negligent loss to replacement of the film were enforceable given assent, bargaining power, and unconscionability concerns.
3. Whether Carr could recover consequential damages for the loss of the images beyond the replacement cost of the film.

## Decision

- The Indiana Supreme Court treated the transaction as a mutual-benefit bailment and held bailment law governed.
- The court enforced the limitation-of-liability provisions on the Kodak film box and Hoosier receipts as binding contract terms.
- The court found Carr assented to the limitation based on his knowledge of such terms and his decision to use the services despite that knowledge.
- The court rejected unconscionability and unequal bargaining power arguments, emphasizing Carr’s sophistication and the availability of alternatives.
- The court reduced the judgment to $13.60 (replacement cost for the four rolls) plus interest, with each party bearing its own costs.

## Legal Principles

- A film-processing arrangement may be characterized as a mutual-benefit bailment rather than a sale of goods.
- A clearly stated limitation-of-liability clause covering negligent loss and limiting recovery to replacement of the film is enforceable when the customer has knowledge of such limitations and proceeds with the transaction.
- Assent may be inferred from conduct where the customer is aware of the limitation and chooses the service anyway.
- Liability limits are less likely to be deemed unconscionable where the customer is sophisticated, not subject to oppressive inequality of bargaining power, and has reasonable alternatives.
- Consequential damages for the subjective or sentimental value of lost photographs may be barred by an enforceable limitation-of-liability term, leaving only replacement-cost recovery.

## Conclusion

The court held that film processing is a bailment and enforced standardized liability limitations known to the customer, restricting damages for negligent loss of film to the film’s replacement cost rather than the claimed value of the lost images.


Carr v. Hoosier Photo Supplies, Inc., 441 N.E.2d 450 (Ind. 1982)