If our contract makes repair or replacement the buyer's only remedy and excludes everything else, will Rhode Island enforce it?
Between businesses, on the one Rhode Island decision located on the point, yes, and the buyer who wants to attack it has to put in evidence. What happens when the limited remedy itself fails is a question that cannot be answered for Rhode Island: § 6A-2-719 is not in the Rhode Island statutes we publish, and no Rhode Island opinion in the Rhode Island opinions we publish applies it, the one opinion that mentions the number does so only inside an appendix reproducing § 6A-2-601, which cross-references it. In Star-Shadow Productions, Inc. v. Super 8 Sync Sound System a film-maker was left with a clause promising only that the product “will be repaired if defective in manufacture or packing” and providing that “Except for such replacement this product is sold without warranty or liability even though defect, damage or loss is caused by negligence or other fault”. The Court upheld it: “limitation of liability clauses are not unconscionable merely because buyers are not fully protected for damages that may arise from the malfunction of their purchased goods or service”, and “[t]he fact that plaintiffs in this case have no protection other than their bargained for remedy of replacement film does not make the limitation of liability clause unconscionable.” The unconscionability attack also failed on the record: the buyer invoked § 6A-2-302(2)'s right to present evidence of commercial setting, purpose and effect but never used it, and “In this case, plaintiffs did not avail themselves of the opportunity to submit evidence demonstrating that the limitation of liability was unconscionable in light of the general commercial background and the commercial needs of this particular trade or case, and consequently, the hearing justice properly granted summary judgment on this issue.” In a CONSUMER transaction the answer flips for personal injury: Ruzzo v. LaRose Enterprises quotes the Rhode Island UCC's lease provision, § 6A-2.1-503(3), that “Limitation, alteration, or exclusion of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable”, and holds a consumer-lease disclaimer of personal injury liability unconscionable. And where the goods are a used motor vehicle sold by a dealer, the General Assembly supplies by statute the backstop the case law does not: under § 31-5.4-3, if the dealer “fails to correct a malfunction or defect as required by the warranty specified in this section which substantially impairs the value of the used motor vehicle to the consumer after a reasonable period of time, the dealer shall accept the return of the used motor vehicle … and refund … the full purchase price”, subject to two affirmative defences, that the defect “does not substantially impair the used motor vehicle’s value” or “is the result of abuse, neglect, or unreasonable modifications or alterations”, and to the dealer's own election to “offer to replace the used motor vehicle with a comparably priced vehicle”, which the consumer need not accept, and a reasonable opportunity is presumed once the same defect has been “subject to repair three (3) or more times” or the vehicle has been out of service for “fifteen (15) or more days during the warranty period.”
The trap
Star-Shadow is the case a Rhode Island client will be pointed to, and it decides less than it looks like it decides. The buyer there did argue essential purpose: “The plaintiffs also maintain that the limitation of liability clause failed its essential purpose — to adequately protect the filmmakers from damages arising from defective film”, and the Court answered it purely as an unconscionability question about risk allocation and insurance, never as the UCC failure-of-essential-purpose rule. So do not tell a client that Rhode Island has adopted either the “dependent” or the “independent” view of what a failed exclusive remedy does to a separate consequential-damages exclusion; no Rhode Island decision on it was located. The second trap is procedural and is the one that actually lost Star-Shadow: § 6A-2-302(2) gives the party attacking the clause a right to put in evidence of the clause's commercial setting, purpose and effect, but a party who rests on the pleadings loses on summary judgment. The third is that the used-vehicle chapter lets a dealer exclude consequential damages only “To the extent otherwise permitted by law”: § 31-5.4-2(e)(12) permits the written warranty to exclude “loss of the use of the used motor vehicle, loss of time, inconvenience, commercial loss, or consequential damages” with exactly that qualifier, so the exclusion does not carry itself.
18 authorities
- case730 A.2d 1081Star-Shadow Productions, Inc. v. Super 8 Sync Sound SystemR.I.decided 1999read it at the source ↗
The words that state the rule
limitation of liability clauses are not unconscionable merely because buyers are not fully protected for damages that may arise from the malfunction of their purchased goods or service.
- case730 A.2d 1081Star-Shadow Productions, Inc. v. Super 8 Sync Sound SystemR.I.decided 1999read it at the source ↗
The words that state the rule
The fact that plaintiffs in this case have no protection other than their bargained for remedy of replacement film does not make the limitation of liability clause unconscionable.
- case730 A.2d 1081Star-Shadow Productions, Inc. v. Super 8 Sync Sound SystemR.I.decided 1999read it at the source ↗
The words that state the rule
In this case, plaintiffs did not avail themselves of the opportunity to submit evidence demonstrating that the limitation of liability was unconscionable in light of the general commercial background and the commercial needs of this particular trade or case, and consequently, the hearing justice properly granted summary judgment on this issue.
- case730 A.2d 1081Star-Shadow Productions, Inc. v. Super 8 Sync Sound SystemR.I.decided 1999read it at the source ↗
The words that state the rule
The plaintiffs also maintain that the limitation of liability clause failed its essential purpose — to adequately protect the filmmakers from damages arising from defective film.
The words that state the rule
Limitation, alteration, or exclusion of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable
The words that state the rule
To be effective, disclaimers of implied warranties must meet certain statutory requirements in accordance with G.L.1956 § 6A-2.1-214.
- statuteR.I. Gen. Laws § 31-5.4-3enactment date not established
The words that state the rule
If the dealer or his or her agent fails to correct a malfunction or defect as required by the warranty specified in this section which substantially impairs the value of the used motor vehicle to the consumer after a reasonable period of time, the dealer shall accept the return of the used motor vehicle from the consumer and refund to the consumer the full purchase price including sales or compensating use tax
- statuteR.I. Gen. Laws § 31-5.4-3enactment date not established
The words that state the rule
The same malfunction or defect has been subject to repair three (3) or more times by the selling dealer or his or her agent within the warranty period, but the same malfunction or defect continues to exist
- statuteR.I. Gen. Laws § 31-5.4-3enactment date not established
The words that state the rule
The vehicle is out of service by reason of repair or malfunction or defect for a cumulative total of fifteen (15) or more days during the warranty period.
- statuteR.I. Gen. Laws § 31-5.4-2enactment date not established
The words that state the rule
To the extent otherwise permitted by law, for loss of the use of the used motor vehicle, loss of time, inconvenience, commercial loss, or consequential damages.
- case730 A.2d 1081Star-Shadow Productions, Inc. v. Super 8 Sync Sound SystemR.I.decided 1999read it at the source ↗
The words that state the rule
The limitation of liability clause’s pertinent part reads: “Limitation of Liability: This product will be repaired if defective in manufacture or packing. Except for such replacement this product is sold without warranty or liability even though defect, damage or loss is caused by negligence or other fault
- statuteR.I. Gen. Laws § 31-5.4-3enactment date not established
The words that state the rule
It shall be an affirmative defense to any claim under this section that: (1) The malfunction or defect does not substantially impair the used motor vehicle’s value; or (2) The malfunction or defect is the result of abuse, neglect, or unreasonable modifications or alterations of the used motor vehicle.
- case730 A.2d 1081Star-Shadow Productions, Inc. v. Super 8 Sync Sound SystemR.I.decided 1999read it at the source ↗
The words that state the rule
First, plaintiffs assert that “in making its determination as to the unconscionability of the contract or clause, the court erred in not affording [plaintiffs] a reasonable opportunity to present evidence as to its commercial setting, purpose and effect,” as required by G.L.1956 § 6A-2-302 (2), to support their claim that the waiver of liability was unconscionable “in light of the general commercial background and commercial needs of the particular trade or case.”
- case730 A.2d 1081Star-Shadow Productions, Inc. v. Super 8 Sync Sound SystemR.I.decided 1999read it at the source ↗
The words that state the rule
In sum, we conclude that the hearing justice’s granting of the defendant’s motion for summary judgment was correct. Accordingly, we deny and dismiss the plaintiffs’ appeal and affirm the summary judgment entered below.
The words that state the rule
Although the disclaimer of warranties provision is in full compliance with the UCC provisions in terms of its conspicuousness and language, we conclude that in Rhode Island, a disclaimer for personal injuries arising from the use of a consumer product introduced into the stream of commerce is “unconscionable.”
The words that state the rule
Accordingly, because this was a consumer lease, we conclude *270 that the trial justice erred in granting summary judgment on this basis.
- statuteR.I. Gen. Laws § 31-5.4-3enactment date not established
The words that state the rule
Alternatively, the dealer may elect to offer to replace the used motor vehicle with a comparably priced vehicle, with any adjustment in price that the parties may agree to. The consumer shall not be obligated to accept a replacement vehicle, but may instead elect to receive the refund provided under this section.
- statuteR.I. Gen. Laws § 31-5.4-3enactment date not established
The words that state the rule
If the consumer fails to make the payment within thirty (30) days, the dealer shall have no further responsibility to provide a refund under this section.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.