Facts
- Frank Wille operated a heating and air-conditioning sales and service business in Wichita, Kansas, using two trade names and purchasing yellow-pages advertising for about 13 years.
- In February 1974, a Southwestern Bell representative solicited Wille’s listings for the July 1974 directory; Wille signed a one-page advertising contract.
- The contract twice directed attention to “terms and conditions” on the reverse side, including a limitation-of-liability clause capping damages for listing errors or omissions at the amount paid for the affected advertisement.
- After signing, Wille moved locations and changed telephone service, including canceling one number and obtaining a new business number with additional lines.
- When the July 1974 directory issued, some yellow-pages listings were omitted or incorrect.
- Wille claimed the errors caused lost profits and required substitute advertising expenditures; he sought about $9,990 for negligence and breach of contract.
- Wille was not billed for, and did not pay for, the listings that were incorrect or entirely missing.
Issues
- Whether a contractual clause limiting a telephone company’s liability for yellow-pages advertising errors or omissions to the cost of the advertisement is unconscionable or contrary to public policy.
- Whether the limitation-of-liability clause barred recovery of consequential damages such as lost profits and substitute advertising costs under the circumstances presented.
Decision
- The Kansas Supreme Court affirmed summary judgment for Southwestern Bell.
- The court held the limitation-of-liability clause was enforceable and not unconscionable or contrary to public policy in the context of a yellow-pages advertising contract.
- The clause barred Wille’s claimed consequential damages beyond the contractually specified limit.
- Because Wille did not pay for the omitted or incorrect listings, the contractual cap effectively precluded any recovery.
Legal Principles
- A clearly presented limitation-of-liability clause in a commercial advertising contract may cap damages for directory errors or omissions at the amount paid for the advertising.
- Unconscionability is assessed as a matter of law in light of the circumstances; disparity in bargaining power alone does not establish unconscionability absent additional unfairness such as deception or oppression.
- Liability limitations in yellow-pages advertising contracts are more likely to be enforced when the agreement concerns advertising rather than essential public-utility telephone service and when alternative advertising media are available.
- Public policy does not bar enforcement of such limitations absent proof of gross negligence, willful misconduct, or deceptive practices.
Conclusion
The court enforced Southwestern Bell’s contractual cap on liability for yellow-pages errors and omissions, concluding that the clause was clear, commercially reasonable in an advertising context, and not invalid on unconscionability or public-policy grounds, thereby foreclosing Wille’s consequential-damages claims.