## Facts

- John C. Osborne rented a van from Alaska Sales and Service d/b/a National Car Rental (National) at the Anchorage airport and listed Thomas J. Lauvetz as an authorized driver.
- Osborne purchased an optional collision damage waiver (CDW) for an added daily charge; the rental agreement face did not describe CDW scope but stated “See Terms and Conditions” above the CDW option.
- The terms and conditions were provided in a travel folder containing the rental documents; they were legible and included CDW conditions and exclusions.
- The CDW language conditioned elimination of the renter’s financial responsibility on compliance with the agreement’s terms and conditions.
- The terms and conditions excluded CDW coverage when the vehicle was operated by someone under the influence of alcohol or drugs.
- Lauvetz drove the van while intoxicated and the van sustained collision damage.
- National sought to recover collision damages (including related charges) from Osborne and Lauvetz despite the CDW purchase.

## Issues

1. Whether the CDW’s intoxication exclusion was enforceable against the renter/authorized driver when the exclusion appeared in incorporated written terms and conditions that were not read and were not orally explained.
2. Whether, under Alaska’s reasonable expectations doctrine for standardized contracts, the intoxication exclusion was so unexpected or oppressive that it could not be enforced.

## Decision

- The Alaska Supreme Court affirmed the superior court’s grant of partial summary judgment for National.
- The Court held the CDW did not cover collision damage occurring while the authorized driver operated the vehicle intoxicated, because coverage was conditioned on compliance with the agreement, including its exclusions.
- The Court concluded the intoxication exclusion was not beyond reasonable consumer expectations and was adequately disclosed through a clear reference on the contract face and legible, provided terms.

## Legal Principles

- Contract terms incorporated by reference are enforceable when the contract clearly directs the party to the referenced terms and the terms are provided and legible, even if the party does not read them.
- Under Alaska’s reasonable expectations doctrine, standardized-form provisions may be refused enforcement if they are bizarre or oppressive, defeat the contract’s basic purpose, or are such that the drafter should know the adhering party would not have agreed if the term had been highlighted.
- A collision damage waiver is a contractual limitation on the renter’s financial responsibility that may be conditioned on compliance with specified contractual restrictions, including intoxication exclusions.
- Absent fraud, concealment, or unconscionability, a merchant generally has no duty to orally explain each exclusion where written terms are incorporated and provided.

## Conclusion

The court enforced the CDW intoxication exclusion because it was incorporated into the rental agreement by clear reference, provided in legible form, and consistent with the conditional nature of a collision damage waiver; therefore, the renter and authorized driver remained liable for collision damage caused while the driver was intoxicated.


Lauvetz v. Alaska Sales & Serv., 828 P.2d 162 (Alaska 1991)