Mr. Pearlman owns a jewelry store. Several years ago, he hired Automatic Alarm Company to install a burglar alarm system in his store. He paid a $300 installation fee and ever since has paid $50 per month for the service. Automatic was supposed to contact the police if it received a signal that a break-in was occurring at Pearlman’s store. The contract between Pearlman and Automatic was presented to him, by Automatic, to sign. It has a clause stating: “Automatic Alarms does not provide insurance. The customer is advised to purchase insurance to cover any loss that might occur despite the installation of the alarm system. Automatic will take all reasonable steps to fulfill its obligation under this contract, but if Automatic fails to do so, it will owe customer $500 as liquidated damages.” There was a box next to this paragraph that Pearlman was supposed to initial when he signed the agreement. He signed the contract on the last page but he did not initial the box next to the liquidated damages paragraph. Two years after Pearlman and Automatic entered into the agreement, burglars broke into his store. The burglars cut the phone line to the alarm, and a signal informed Automatic that a break-in was occurring at Pearlman’s jewelry store. Despite this, Automatic’s employees failed to notify the police. Pearlman, who carried no insurance, lost over $500,000 in merchandise. Automatic has tendered Pearlman the $500 as provided in the contract. Mr. Pearlman has also told the member of your law firm who interviewed him that he did not initial the box next to the liquidated damages paragraph because he never reads contracts. His customary practice is just to flip to the end when he is presented with a contract to sign. Pearlman assumed that if there were important terms, the alarm company’s salesman would have brought them to his attention. He also tells you that insurance for his inventory that was stolen would have cost him $20,000 per year, so he relied on the alarm system instead.