Is this repair-or-replace-only remedy going to hold, and can we exclude consequential damages?
Under Fla. Stat. § 672.719 (UCC 2-719) an agreement may substitute remedies and limit the measure of damages, but the whole of subsection (1) is expressly subject to subsections (2) and (3) AND to the preceding section on liquidation and limitation of damages, Fla. Stat. § 672.718, under which damages may be liquidated only at an amount reasonable in the light of the anticipated or actual harm, the difficulties of proof of loss and the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy, and a term fixing unreasonably large liquidated damages is void as a penalty, and a remedy is exclusive only if it is expressly agreed to be exclusive; where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in the code. Consequential damages may be limited or excluded unless the limitation is unconscionable; limiting consequential damages for personal injury in the case of consumer goods is prima facie unconscionable, but limitation of damages where the loss is commercial is not. The Florida Supreme Court has applied subsection (3) to a commercial limitation clause: where the count was in negligence, the potential harm was to property only and not to the person, and the parties were two commercial entities with no suggestion of an imbalance of bargaining power, the limitation of remedy was not prima facie unconscionable and should have been given effect absent a showing of unconscionability, so the trial court erred in instructing the jury to disregard it.
The trap
The exclusivity has to be stated: under § 672.719(1)(b) resort to a stated remedy is optional unless the remedy is expressly agreed to be exclusive, so a clause that merely lists repair or replacement without saying 'sole and exclusive remedy' adds a remedy rather than replacing one. Florida's UCC unconscionability provision (§ 672.302) is also the one that governs whether the consequential-damages exclusion survives, and it is judged as of the time the contract was made; § 672.302(2) adds that where a clause may be unconscionable the parties must be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect. Two limits on the one Florida Supreme Court decision enforcing such a clause are worth knowing before leaning on it. It turned on the loss being to property only and on the parties being commercial equals, so a personal-injury or consumer-goods loss sits on the other side of § 672.719(3)'s prima facie line. And the court attached a footnote expressly reserving whether the limitation would have been enforceable had the claim been pleaded in strict liability rather than negligence, so a strict-liability count is unresolved here.
8 authorities
- statuteFla. Stat. § 672.719enactment 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 chapter and may limit or alter the measure of damages recoverable under this chapter, as by limiting the buyer’s remedies to return of the goods and repayment of the price or to repair and replacement of nonconforming 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.
- statuteFla. Stat. § 672.719enactment 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 code. (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.
- statuteFla. Stat. § 672.718enactment date not established
The words that state the rule
(1) Damages for breach by either party may be liquidated in the agreement but only at an amount which is reasonable in the light of the anticipated or actual harm caused by the breach, the difficulties of proof of loss, and the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy. A term fixing unreasonably large liquidated damages is void as a penalty.
- statuteFla. Stat. § 672.302enactment date not established
The words that state the rule
(1) If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result. (2) When it is claimed or appears to the court that the contract or any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect to aid the court in making the determination.
- case445 So. 2d 329Radiation Technology, Inc. v. Ware Construction Co.Fla.decided 1983-12-22read it at the source ↗
The words that state the rule
Warranty The only obligation of [Radiation] and its distributor shall be to replace any of this product proved to be defective. Before using test this product to determine its suitability for the intended use. User assumes all risk and liability while testing and using this product. Neither [Radiation] nor its distributor shall be liable for any injury, loss or damage, direct or consequential, relating to the use or inability to use this product. While the technical information on this sheet is believed to be reliable, [Radiation] does not guarantee its accuracy or completeness.
- case445 So. 2d 329Radiation Technology, Inc. v. Ware Construction Co.Fla.decided 1983-12-22read it at the source ↗
The words that state the rule
The legal issue is whether the trial court erred in instructing the jury to disregard the warranty/limitations of liability clause quoted above and in failing to give effect to the limitations of remedy provision. The case went to the jury on a negligence theory; there was privity in contract between the parties; and there was no count in strict liability.
- case445 So. 2d 329Radiation Technology, Inc. v. Ware Construction Co.Fla.decided 1983-12-22read it at the source ↗
The words that state the rule
Further, since the count was in negligence [*] and it is undisputed that the potential harm was to property only and not to the person, the limitations of remedy provision was not prima facie unconscionable and should have been given effect absent a showing of unconscionability. § 672.719(3), Fla. Stat. (1979). The facts here show that the parties were two commercial entities with no suggestion of an imbalance of bargaining power between them rendering the limitations clause unconscionable and unenforceable. Under the circumstances, the trial court erred in failing to allow the jury to consider the limitations of remedy provision. We quash the district court opinion and remand for proceedings consistent with this opinion. It is so ordered. ADKINS, OVERTON and McDONALD, JJ., concur. ALDERMAN, C.J., dissents with an opinion, in which BOYD and EHRLICH, JJ., concur.
- case445 So. 2d 329Radiation Technology, Inc. v. Ware Construction Co.Fla.decided 1983-12-22read it at the source ↗
The words that state the rule
[*] We express no opinion on whether the limitations of remedy provision would have been enforceable had the count been in strict liability.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.