Is our repair-or-replace remedy exclusive, and does it survive?
The agreement may provide for remedies in addition to or in substitution for those in Chapter 2 and may limit or alter the measure of damages, for example 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. But resort to a stated remedy is OPTIONAL unless the remedy is expressly agreed to be exclusive, in which case it is the sole remedy; and where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in the Act. Consequential damages may be limited or excluded unless the limitation is unconscionable, and limiting consequential damages for personal injury in the case of consumer goods is prima facie unconscionable, while limiting commercial loss is not.
The trap
Same two-stage failure as elsewhere in the UCC, with New Jersey's own consumer overlay on top. If the clause does not say the remedy is EXCLUSIVE it merely adds to the buyer's statutory remedies. If it is exclusive and the repair promise cannot cure the defect, § 12A:2-719(2) lets remedy "be had as provided in this Act", but that does not automatically take the consequential-damages exclusion with it: Kearney & Trecker holds § 12A:2-719 does not require invalidating that exclusion when the limited remedy fails, and tests it separately against the parties' intent and reasonable commercial expectations. New Jersey's consumer-contract statute (TCCWNA) adds its own layer for consumer contracts, but § 56:12-16's hedge rule ends 'provided, however, that this shall not apply to warranties', so this rule states no TCCWNA rule. Draft the exclusivity and the consequential-damages exclusion as separate clauses; under Kearney & Trecker the exclusion is judged on its own, so a clean separation keeps that analysis clean.
3 authorities
- statuteN.J. Stat. Ann. § 12A: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 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 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. (2) Where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in this Act. (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.
- statuteN.J. Stat. Ann. § 56:12-16enactment date not established
The words that state the rule
No consumer contract, warranty, notice or sign, as provided for in this act, shall contain any provision by which the consumer waives his rights under this act. Any such provision shall be null and void. No consumer contract, notice or sign shall state that any of its provisions is or may be void, unenforceable or inapplicable in some jurisdictions without specifying which provisions are or are not void, unenforceable or inapplicable within the State of New Jersey; provided, however, that this shall not apply to warranties.
- case107 N.J. 584Kearney & Trecker Corp. v. Master Engraving Co.N.J.decided 1987read it at the source ↗
The words that state the rule
Accordingly, we conclude that N.J.S.A. 12A:2-719 does not require the invalidation of an exclusion of consequential damages when limited contractual remedies fail of their essential purpose. It is only when the circumstances of the transaction, including the seller’s breach, cause the consequential damage exclusion to be inconsistent with the intent and reasonable commercial expectations of the parties that invalidation of the exclusionary clause would be appropriate under the Code.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.