Is our 'repair or replace is the exclusive remedy' clause good in Iowa?
Yes, on article 2's terms. Subject to subsections 2 and 3 and to § 554.2718 on liquidation and limitation of damages, the agreement may provide for remedies in addition to or in substitution for those provided in article 2 and may limit or alter the measure of damages recoverable, 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 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 (Iowa Code § 554.2719(1)). Where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in the chapter (§ 554.2719(2)). 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 (§ 554.2719(3)). Section 554.2718, which subsection 1 is expressly subject to, sets the outer limit on the figure a clause may name: damages may be liquidated "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" (§ 554.2718(1)).
The trap
Exclusivity is not presumed. On subsection 1(b)'s words, unless the remedy is expressly agreed to be exclusive it is merely one more option the buyer may take or leave, so a repair-or-replace clause that never says the remedy is exclusive adds a remedy instead of replacing the article 2 ones. Subsection 2 is the other trap: when the limited remedy fails of its essential purpose the buyer gets the chapter's remedies, and whether a separately drafted consequential-damages exclusion survives that failure is a question no Iowa authority in this rule answers. Note also § 554.2316(4): remedies for breach of warranty can be limited in accordance with §§ 554.2718 and 554.2719, so this section, not the disclaimer rules, is what measures a warranty's remedy limit.
5 authorities
- statuteIowa Code § 554.2719enactment date not established
The words that state the rule
Subject to the provisions of subsections 2 and 3 of this section and of section 554.2718 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 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.
- statuteIowa Code § 554.2719enactment date not established
The words that state the rule
Where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in this chapter.
- statuteIowa Code § 554.2719enactment date not established
The words that state the rule
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.
- statuteIowa Code § 554.2316enactment date not established
The words that state the rule
Remedies for breach of warranty can be limited in accordance with the provisions of this Article on liquidation or limitation of damages and on contractual modification of remedy (sections 554.2718 and 554.2719).
- statuteIowa Code § 554.2718enactment date not established
The words that state the rule
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.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.