Will a repair-or-replace exclusive remedy and a consequential-damages bar hold up in Delaware?
For sales of goods, and subject both to the two limits below and to § 2-718 on liquidation and limitation of damages, the agreement may provide remedies in addition to or in substitution for the UCC's and may limit or alter the measure of damages, including limiting the buyer to return of the goods and repayment of the price or to repair and replacement; a remedy is optional unless expressly agreed to be exclusive, in which case it is the sole remedy. Where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in the title. Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable; a limitation of consequential damages for personal injury in the case of consumer goods is prima facie unconscionable, but limitation is not where the loss is commercial.
The trap
'Exclusive' must be said. Under § 2-719(1)(b) a remedy the contract merely lists is cumulative, so a repair-or-replace clause without the word exclusive (or its equivalent) adds a remedy instead of removing the buyer's others. And the section puts the two halves in separate subsections: if the repair remedy fails of its essential purpose the buyer is thrown back on the remedies the title provides, while the consequential-damages exclusion falls only if it is unconscionable, and for a commercial loss the statute says only that such a limitation is not PRIMA FACIE unconscionable. What subsection (3) withholds is the presumption, not the attack: the exclusion stands unless the buyer proves unconscionability, and the buyer carries that burden. That a (3) exclusion survives a (2) failure follows from the section's structure rather than from any Delaware decision applying § 2-719.
2 authorities
- statute6 Del. C. § 2-719enactment date not established
The words that state the rule
(2) Where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in this title. (3) Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable. Limitation of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable but limitation of damages where the loss is commercial is not.
- statute6 Del. C. § 2-719enactment date not established
The words that state the rule
(1) Subject to the provisions of subsections (2) and (3) of this section and of the preceding section on liquidation and limitation of damages, (a) the agreement may provide for remedies in addition to or in substitution for those provided in this Article and may limit or alter the measure of damages recoverable under this Article, as by limiting the buyer’s remedies to return of the goods and repayment of the price or to repair and replacement of non-conforming goods or parts; and (b) resort to a remedy as provided is optional unless the remedy is expressly agreed to be exclusive, in which case it is the sole remedy.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.