Reference no: EM132097329

Limited of Liability: Puget Sound Financial is in the business of purchasing accounts receivables from other companies and then lending money to those companies based on a percentage of the accounts receivables. Pudget Sound will first conduct an investigation of a company with which it wishes to do business to determine if it is finicanically sound. One such company was The Benefit Group. Puget Sound asked Unisearch to conduct what is called a "UCC search" of The Benefit Group to discover any eixsting liens against its assets. Unisearch did so, and sent to Puget Sound a search report showing there were no existing liens, and included its standard invoice. Puget Sound and Unisearch had done business 47 times before, and in each case, plus this case involving The Benefit Group, the invoices were identical. On the first page of the form invoice, in the upper right corner, there was a limitation of liability in a shaded box. It stated Unisearch's liability was limited to $25. Based on the search report, Puget Sound loaned $100,000 to The benefit group, secured by its accounts receivables and other assets, which later defaulted. When Puget Sound attempeted to forclose on the collateral, it learned there was an exisiting lien that Unisearch had not discovered. Puget Sound, now unable to collect against The Benefit Group, sued Unisearch for negligence and breach of contract, and Unisearch filed a motion for summary judgement based on the limitation of liabillity clause.

A. What internal factors( within the contract) would support the validity of Unisearch's limitation of liability clause?

B. What external factors( not in the contract) would support the valididty of Unisearch's limitation of liability clause?

C. Is the limitation of liability clause legally fair?

Puget Sound Financial, LLC v. Unisearch, Inc., 146 Wash. 2d 428 , Washington Supreme Court (2002)