Arthur's Garage, Inc. v. Racal-Chubb Security Sys., Inc

In Arthur's Garage, Inc. v. Racal-Chubb Security Sys., Inc., 997 S.W.2d 803, 810 (Tex. App.-Dallas 1999, no pet.), the non-breaching party contended that a provision entitled "Liquidated Damages and Indemnification," which limited Racal-Chubb's liability to $ 350, was an unenforceable penalty. See id. at 809. The Dallas Court of Appeals held that, despite the title of the provision, the clause set an upper limit to Racal-Chubb's liability and thus was a limitation of liability provision and not subject to a penalty analysis. Id. at 810. The Dallas Court further held that such a provision is enforceable unless it violates public policy, and generally it does not if no disparity of bargaining power exists between the parties. Id.