O’Callaghan v. Waller & Beckwith Realty Co.

1958 Illinois Supreme Court

• Tenant fell while crossing paved courtyard, sued for negligence. Lease included exculpatory clause, plaintiff wants court to find contract unconscionable.
• Court holds for defendant landlord–found tenant made no effort to find other apartment with other lease.
• Case for government intervention in common carrier cases is much stronger, since government is giving carrier a monopoly but granting a license. Housing market is not regulated in the same way as common carriers.
• Exculpatory clause (similar to forum-selection clause in Carnival Cruise Lines, Inc. v. Shute) can benefit customer too: risk is reduced, expected return is increased, customer (tenant) can benefit from lower cost.
• Dissent: because of housing market (shortage), demand will not go down nor will price go up–rent control is in effect at this time.
• Does exculpatory clause promote negligence? Judge Schaefer’s response: this is exactly what insurance does.
• Difference with insurance: ? Premiums can increase if you are negligent
? Insurance company can manage risk, which individual tenant cannot

• Currently, most states will strike down exculpatory clauses, either by statute or judicial decision.

Author: international