Will Oregon enforce an exclusive repair-or-replace remedy and a consequential-damages exclusion in a sale of goods?
ORS 72.7180, which 72.7190 is subject to, allows damages to 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 makes a term fixing unreasonably large liquidated damages void as a penalty (72.7180(1)); where the seller justifiably withholds delivery because of the buyer's breach, the buyer is entitled to restitution of its payments above either the sum the liquidation term gives the seller or, with no such term, 20 percent of the value of the total performance the buyer owed or $500, whichever is smaller, subject to the seller's offsets (72.7180(2)-(3)). Subject to its subsections (2) and (3) and ORS 72.7180, ORS 72.7190 allows the agreement to provide remedies in addition to or in substitution for those in chapter 72 and to limit or alter the measure of damages, as by limiting the buyer's remedies to return of the goods and repayment of the price or to repair and replacement; resort to a remedy is optional unless 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 Uniform Commercial Code. Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable; limiting consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable, but limiting damages where the loss is commercial is not.
The trap
A remedy is optional, not exclusive, unless expressly agreed to be exclusive (72.7190(1)(b)). A limitation of consequential damages for personal injury in the case of consumer goods is prima facie unconscionable (72.7190(3)). A clause letting the seller keep everything already paid is also limited from outside this section: on the buyer's breach the buyer may recover payments above the liquidated sum, or above the lesser of 20 percent of the total performance owed and $500 where the contract liquidates nothing (72.7180(2)).
3 authorities
- statuteORS 72.7190enactment date not established
The words that state the rule
Subject to the provisions of subsections (2) and (3) of this section and of ORS 72.7180 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. (2) Where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in the Uniform Commercial 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.
- statuteORS 72.7180enactment 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.
- statuteORS 72.7180enactment date not established
The words that state the rule
Where the seller justifiably withholds delivery of goods because of the buyer’s breach, the buyer is entitled to restitution of any amount by which the sum of the buyer’s payments exceeds: (a) The amount to which the seller is entitled by virtue of terms liquidating the seller’s damages in accordance with subsection (1) of this section; or (b) In the absence of such terms, 20 percent of the value of the total performance for which the buyer is obligated under the contract or $500, whichever is smaller. (3) The buyer’s right to restitution under subsection (2) of this section is subject to offset to the extent that the seller establishes: (a) A right to recover damages under the provisions of this chapter other than subsection (1) of this section; and (b) The amount or value of any benefits received by the buyer directly or indirectly by reason of the contract.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.