Adloo v. H.T. Brown Real Estate Inc.12/16/1996
carrier, the petitioners sued the respondents for damages. Following a trial in the Circuit Court for Montgomery County, the jury awarded them $20,000. The respondent noted an appeal to the Court of Special Appeals. The intermediate court reversed the judgment of the circuit court. In an unreported opinion, characterizing it as an exculpatory clause, that court held that the lock-box authorization provision, quoted above, was valid and enforceable and, thus, precluded the petitioners' claim. We granted certiorari, at the petitioners' request, to consider this important issue.
II
A.
It is well settled in this State, consistent with "the public policy of freedom of contract," see Wolf v. Ford, 335 Md. 525, 531, 644 A.2d 522, 525 (1994), that exculpatory contractual clauses generally are valid. Id.; Eastern Ave. Corp. v. Hughes, 228 Md. 477, 480, 180 A.2d 486, 488 (1962) ; Atty Griev. Comm'n v. Owrutsky, 322 Md. 334, 350, 587 A.2d 511, 518 (1991); Sullivan v. Mosner, 266 Md. 479, 494-96, 295 A.2d 482, 490-91 (1972); Baker v. Roy Haas Associates, Inc., 97 Md. App. 371, 377, 629 A.2d 1317, 1320 (1993); Schrier v. Beltway Alarm Co., 73 Md. App. 281, 286, 533 A.2d 1316, 1318 (1987); Boucher v. Riner, 68 Md. App. 539, 548, 514 A.2d 485, 490 (1986); Winterstein v. Wilcom, 16 Md. App. 130, 135, 293 A.2d 821, 824, cert. denied, 266 Md. 744 (1972). Aside from legislation proscribing such clauses, this Court, in Wolf v. Ford, 335 Md. at 531-32, 644 A.2d at 525-26 (citing Wilcom, 16 Md. App. at 135-36, 293 A.2d at 824, Restatement (Second) Contracts § 195(1) (1981), and W. Page Keeton, et al., Prosser and Keeton on the Law of Torts, § 68, at 482 (5th ed. 1984)), identified three circumstances in which exculpatory clauses in contracts are invalid and will not be enforced: when a party to the contract attempts to avoid liability for intentional conduct or harm caused by reckless, wanton, or gross behavior; when the contract results from grossly unequal bargaining power; and when the transaction is one adversely affecting the public interest. We also noted that this last exception
includes the performance of a public service obligation, e.g., public utilities, common carriers, innkeepers, and public warehousemen. It also includes those transactions, not readily susceptible to definition or broad categorization, that are so important to the public good that an exculpatory clause would be "patently offensive," such that "' the common sense of the entire community would pronounce it' invalid,"
id. at 532, 644 A.2d at 526 (quoting Md. Nat'l Cap. P. & P. v. Wash. Nat'l Arena, 282 Md. 588, 606, 386 A.2d 1216, 1228 (1978), in turn quoting Estate of Woods, Weeks & Co., 52 Md. 520, 536 (1879), and the standard by which it is measured is a strict one. See Anne Arundel Co. v. Hartford Accident, 329 Md. 677, 686-88, 621 A.2d 427, 431-32 (1993); Finci v. American Casualty, 323 Md. 358, 376-79, 593 A.2d 1069, 1077-78 (1991).
While we have clearly defined when exculpatory clauses in contracts are valid, there is a threshold issue that must be considered prior to addressing that inquiry: whether the clause at issue is, in fact, an exculpatory clause. Stated differently, the question is the adequacy of the clause to shield one of the parties from liability. That issue turns on the intention of the parties. As in the case of statutory construction, determining the intention of the parties to a contract involves construing the language of the contract, more particularly, the words of the subject clause. Highley v. Phillips, 176 Md. 463, 5 A.2d 824 (1939); Fidelity & Deposit Co. v. Mattingly Lumber Co., 176 Md. 217, 4 A.2d 447 (1939); Rollins v. Bravos, 80 Md. App.
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