Ad blocker interference detected!
Wikia is a free-to-use site that makes money from advertising. We have a modified experience for viewers using ad blockers
Wikia is not accessible if you’ve made further modifications. Remove the custom ad blocker rule(s) and the page will load as expected.
Hartland Computer Leasing Corp. v. Insurance Man, Inc., 770 S.W.2d 525 (Mo. App. 1989) (full-text).
Factual Background Edit
Insurance Man, Inc., lessee, contracted with appellant for a computer equipment lease. Under the terms of the lease, Insurance Man was to select computer equipment carried by the vendor, which appellant would purchase and in turn lease to Insurance Man. The lease required an initial payment for the first and last months. The lease stated that as between lessor and lessee, the lessor made no express or implied warranties of condition, merchantability, or fitness of any particular purpose and the equipment was being leased on an "as is" basis. The back of the lease form contained a default provision, specifically stating that in the event of nonpayment of any installment of rent, lessor was entitled to terminate the lease, sell, or re-rent the equipment and recover damages for balances due under the lease, less the amount recovered by selling or re-renting.
Lessee claimed that the equipment worked for a short time but then malfunctioned. Lessee took the equipment to the vendor and repairs were made under vendor’s warranty, which was expressly assigned by the purchaser-lessor to the lessee under the terms of the lease. When the equipment malfunctioned again, lessee stopped making payments to lessor.
Trial Court Proceedings Edit
The lessor sued the lessee and guarantors on the lease for breach of contract. The trial court found the lease to be a contract of adhesion, and therefore, the lessee was free to disregard the express disclaimer of all warranties and entered judgment for the lessee and guarantors. The lessor appealed.
Appellate Court Proceedings Edit
In Missouri, an adhesion contract is a form contract created and imposed by a stronger party upon a weaker party on a "take this or nothing basis," the terms of which unexpectedly or unconscionably limit the obligations of the drafting the party. Courts do not view adhesion contracts as inherently sinister and automatically unenforceable; rather, as with all contracts, the courts seek to enforce the reasonable expectations of the parties garnered not only from the words of a standardized form imposed by its proponent but from the totality of circumstances surrounding the transaction. Only such provision of the standardized form which fail to comport with such reasonable expectation and are unexpected and unconscionably unfair will be held to be unenforceable.
Since standardized contracts address the mass of users, the test for “reasonably expectations” is objective, addressed to the average member of public who accepts such a contract, not the subjective expectations of an individual party.
The Court of Appeals reversed. The court found that the lease of computer equipment was not an unconscionable contract of adhesion. Although the lessor clearly and unambiguously expressed disclaimer of all warranties covering the computer equipment, the lease contained an assignment by the lessor of all warranties made by the manufacturer and seller to lessee. The lessee was engaged in the insurance industry and presumably accustomed to form contracts. The lessee’s refusal to go to the vendor to repair the equipment a second time does not indicate an objectively reasonably expectation that the lessor was obligated under any implied warranty of merchantability or of fitness.