Sarah Works for a Company That Has Offered a Promotion

question 30

Multiple Choice

Sarah works for a company that has offered a promotion if she is willing to relocate.Sarah accepts the position and puts her house on the market right away.She sells her house the first day that the realtor holds an open house.The buyer agrees to pay cash for the full purchase price of the house.Sarah is thrilled,except that it means that she will have to put her furniture in storage until she finds another house in her new city.She enters into a written contract with Safe Storage,Inc.The agreement includes a clause excusing Safe Storage,Inc.from any liability for loss or damage,even if the loss or damage results from Safe Storage's negligent acts.Because of Self Storage's negligence,a fire destroys the warehouse and all of its contents,including Sarah's household goods and furniture.Sarah claims that Safe Storage,Inc.is liable for the full value of the contents,which is approximately $10,000.Is Sarah correct?

• A)Yes,because storage warehouses are strictly liable for loss or damage,regardless of fault and regardless of exculpatory clauses.
• B)No,because there was equal bargaining power between Sarah and Safe Storage,Inc.
• C)Yes,because exculpatory clauses are illegal and never enforceable.
• D)Probably,because often a court will reject an exculpatory clause against a bailor who is a consumer.

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Definitions:

Optimal Consumption

The consumption mix that provides the highest satisfaction or utility level to an individual, given their income and prices.

Indifference Curve

A graphical representation of different bundles of goods between which a consumer is indifferent, showing levels of utility.

Indifference Curves

Graphs representing different combinations of two goods that provide the same level of utility or satisfaction to a consumer.

Optimal Consumption

The consumption point at which a consumer achieves the highest possible satisfaction from available resources.