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Contracts • Terms of the Contract
K#105
Legal Definition
Limitations on remedies do not eliminate warranties, they merely limit them or set the recovery amount for any breach. A person can limit remedies even for express warranties, though any limit may not be unconscionable. A limitation is *prima facie* unconscionable if it limits damages for personal injury caused by a breach of warranty on consumer goods.
Plain English Explanation
It's okay to limit remedies, but they can't be too limited. In other words, it's common and accepted for someone to place a limitation on how much someone can sue for if there is a breach, but if you feel that the limitation is unconscionable, then you can argue that the limit does not apply.
Hypothetical
Hypo 1: Bob owns a car dealership. Sam wants to buy a car. In the purchase agreement, Bob has a term that limits his liability for any defects on the car to either replacement of the vehicle or repair of the defect. Sam agrees. A day later, Sam brings his car in because there is a knocking sound coming from the engine. Sam wants his money back. Result: Though Bob has limited Sam's remedies and Bob's own liability, this wouldn't necessarily be enough to rise to the level of unconscionable.
Hypo 2: Same facts as Hypo 1, except after Sam brings his car back to be fixed, two days later there is knocking again in the engine. Sam brings it back to get fixed. Four days after Sam gets the car back, there is a knocking in the engine. Bob replaces Sam's car. Sam drives that car for a week and there is a knocking in the engine. Sam wants his money back. Result: A court would likely find it unconscionable to force Sam to keep coming back to Bob with the same problem forever simply because the contract includes such a term. Thus, a court may get rid of the limitation of liability clause from the contract, enabling Sam to pursue other remedies for breach.
Hypo 2: Same facts as Hypo 1, except after Sam brings his car back to be fixed, two days later there is knocking again in the engine. Sam brings it back to get fixed. Four days after Sam gets the car back, there is a knocking in the engine. Bob replaces Sam's car. Sam drives that car for a week and there is a knocking in the engine. Sam wants his money back. Result: A court would likely find it unconscionable to force Sam to keep coming back to Bob with the same problem forever simply because the contract includes such a term. Thus, a court may get rid of the limitation of liability clause from the contract, enabling Sam to pursue other remedies for breach.
Visual Aids
Related Concepts
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