Our current safe deposit box lease (from a vendor) states that the bank will be liable for negligence up to 300 times the annual rent. Does anyone know where this amount comes from? It is not a state law issue as our state safe deposit box law does not address this.

We are preparing new leases and I'd like to look at lowering this amount if possible, but would like to find out the origin before I change it.

It's called a "limitation of damages clause" and was probably just plugged in by the author of your contract without reference to state law. In circumstances where the custodian was negligent, courts rarely enforce such clauses. They are unfair to the consumer; i.e. the party who caused the damage should not get to set the maximum amount of their liability.

Its sole "value" is that the renter might actually believe it was enforceable and not seek legal advice. Talk to your attorney about whether it is worth retaining.

Actually, we had a situation like this two years ago and the plaintiff's attorney conceded the validity of the cause. It had a maximum liability set at 50k.

The clause contributed greatly to a settlement, as the plaintiff's orignial offer greatly exceeded 50k. Settlement was about 20 percent below the 50k.

In a lawsuit there are few things more advantageous than an opposing counsel who doesn't do any research.

Straw, can you give some idea of what the bank had done that created the liability?

Ours states that we accept no liability for damage to contents. During Hurricane katrina, we had 15 branches that had safe deposit water damage, and we paid no claims based on the content of the boxes.

You have a better chance of enforcing a provision that says the bank is not liable than one that sets an arbitrary amount for liability. That's particularly true when the damage is caused by an act of God, not negligence on the part of the custodian. Contracts often have different provisions regarding liability depending on whether the cause was negligence or an act of God.

The more clear the contract makes it that all you are renting is a hole in the wall, not an impregnable fortress, the better off you are.

Our contract states that we provide a location to safeguard their documents, but that we accept no liability for any damage that occurs.

So, Ken, do you think a bank can state that it carries no liability, regardless of whether it is negligence or an act of God?

You can say anything that you want, but if your bank is negligent you will probably be found liable.

As simple as safe deposit contracts are they need a practiced draftsman who has done the necessary research in the state where the box is located. For example, giving yourself a free pass might not work, but saying you are not liable unless you are grossly negligent will work in some states. When the contract also stresses that insurance of the contents is the customer's responsibility and neither the bank nor any government agency provides insurance on the contents you are doing a better job of getting your point across and it sounds less like you are just trying to weasel out of something.

Again, they rented a hole in the wall, nothing else. Explain it to them.

Rub - ours states that, and we suffered no losses or judgements against us from hurricane Katrina.

I think the origin for the SD Box lease liability limit for "negligence up to 300 times the annual rent" is because negligence (a.k.a tort) by the defendant/bank is punishable by requiring the bank to pay 'treble damages'. Treble damages are the plaintiff's compensatory damages times 3.

It would be difficult to prove what was contained in a safe deposit box without having taken an inventory immediately prior to a 'loss'. With the clause in question, the only damage the customer can claim will be the cost of the lease/rental, and not for the value of contents in the SD box. I would imagine this is consistent with other clauses in the lease agreement. Thereby, the resulting treble damages, due to the bank's negligence will be 3x's the rental amount.