You are a recently-admitted attorney and have been asked by a senior member of your firm to interview a possible new client of a law firm. A man named Hugh Pearlman has consulted your firm about whether he has a viable lawsuit against a company with which he has done business for several years. Mr. Pearlman meets with you and related the following factual information:

Pearlman owns a jewelry store. Several years ago, he hired Automatic Alarm Company to install a burglar alarm system in his store. He paid a $300 installation fee and ever since has paid $50 monthly fee for the service. Automatic was supposed to contact the police if it received a signal that a break-in was occurring at Pearlman’s store.

The contract between Pearlman and Automatic was presented to him, by a representative of Automatic, to sign before it installed the alarm system. The agreement, which was a pre-printed form, has a clause stating: “Automatic Alarms does not provide insurance. The customer is advised to purchase insurance to cover any loss that might occur despite the installation of the alarm system. Automatic will take all reasonable steps to fulfill its obligation under this contract, but if Automatic fails to do so, our possible damages are limited to $500.” There was a box next to this paragraph that Pearlman was supposed to initial when he signed the agreement. He signed the contract on the last page but he did not initial the box next to the paragraph just quoted.

Two years after Pearlman and Automatic entered into the agreement, burglars broke into his store. The burglars cut the phone line to the alarm, and a signal informed Automatic that a break-in was occurring at Pearlman’s jewelry store. Despite this, Automatic’s employees failed to notify the police. Pearlman, who carried no insurance, lost over $500,000 in merchandise. Automatic has tendered Pearlman the $500 as provided in the contract.

Mr. Pearlman has also told you that he did not initial the box next to the quoted paragraph because he never reads contracts, and the representative of the alarm company did not point it out to him when he was presented with the agreement. His customary practice is just to flip to the end when he is presented with a contract to sign. Pearlman assumed that if there were important terms, the alarm company’s salesman would have brought them to his attention. He also tells you that insurance for his inventory that was stolen would have cost him $25,000 per year, so he relied on the alarm system instead.

Question/Problem:

Mr. Pearlman was told that he will be contacted in a week about whether your firm is interested in taking his case. The attorney who asked you to meet with Pearlman has asked you to prepare a memorandum of 500 - 750 words to discuss Pearlman’s case to make a recommendation to her about whether the firm will advise Pearlman that he likely does, or does not, have a case against Automatic that is worth pursuing.

Accordingly, prepare and essay presenting your argument about why you think that the firm should, or should not, take on Mr. Pearlman for a new client. Give your reasons analyzing whether you believe that his possible lawsuit against Automatic is worthwhile. Among the factors to consider is that it would be a “contingency” case, meaning that the firm will provide legal services for free in exchange for 35% of any recovery. Pearlman will be responsible for any expenses, such as filing fees, the cost of court reporters for depositions, etc.

If you think the firm should take on the case, explain what you think is the best argument he has, and what arguments you expect Automatic’s attorneys to make in response. In the same way, if you don’t think it is a good idea for the firm to take the case, explain why you think Automatic is likelier to prevail. What evidence is likely to be relevant? What weaknesses, if any, do you see in Pearlman’s case?

Answer rating: 100% (QA)

In this Contract the Agreement signed by the Pearlman with the alarm company had the clause where it was mentioned the liability of the alarm company limited to up to 500 if the damage occurred to Pea... View the full answer