Contractual Limitations on Remedies
69 Pages Posted: 27 Jan 2016 Last revised: 9 Feb 2016
Date Written: 1988
Section 2-719 has generated a significant amount of appellate level litigation in recent years. The provision also has been subjected to much professional commentary in law reviews and elsewhere. In the process, the courts and commentators have contributed significantly to an understanding of this rather ethereal provision. Most importantly, it should be kept firmly in mind that Section 2-719, like so many of the provisions of Article Two, "seeks to encourage a method of lawfinding, rather than dictate a particular result."a The Section is more a set of guidelines than a firm rule of law. The text speaks with the amorphous tongue of "failure of essential purpose" and "unconscionability" while its Official Comment waxes vaguely with phrases like "minimum adequate remedies," "fair quantum of remedy," "substantial value of the bargain," and, again "unconscionability."There is much here to cause due trepidation and the opportunity for error by those who attempt to respond effectively to Section 2-719's vague dictates. Over a reasonably short period of time the courts have developed a framework for analysis which provides predictable results for most questions falling within the ambit of the provision. However, this sunny picture is clouded somewhat by the question of the continuing efficacy of a contract provision limiting or excluding liability for consequential damages under subsection. In particular, the question is whether, once it has been determined under subsection that circumstances have caused an exclusive remedy "to fail of its essential purpose" and "remedy may be had as provided in this Act," does recovery include consequential damages or, does the separate damage disclaimer survive to limit or bar liability for consequential loss?
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