Brief Fact Summary. Murray (Plaintiff) sued Holiday Rambler, Inc. (Defendant) to recover for repairs and loss of use of the Plaintiff’s motor home. Defendant appealed from a judgment for the Plaintiff.
Synopsis of Rule of Law. Although an express warranty excludes consequential damages, when the exclusive contractual remedy fails, the buyer may recover consequential damages under the UCC.
Issue. Whether the buyer has a remedy where the exclusive limited remedy of the contract fails?
Held. Yes. Judgment affirmed in part.
When a limited remedy fails of its essential purpose, the limitation will be disregarded and ordinary UCC remedies will be available. The purpose of an exclusive remedy of repair is to give the buyer goods, which conform to the contract within a reasonable time after a defect is discovered. When the seller is given a reasonable opportunity to fix the problem and the vehicle still fails to operate, the limited remedy fails of its essential purpose. Then the buyer may invoke the remedies available under the UCC.
The remedies available under the UCC include the right to consequential damages. Consequential damages include any loss by general needs of the buyer of which the seller has reason to know at the time of contracting and which could not be prevented otherwise. Consequential damages also include damages for loss of use of an inoperable motor vehicle. In other words, consequential damages may be recovered when a limited contractual remedy excluding damages has failed. Although the express warranty excludes consequential damages, when the exclusive contractual remedy fails, the buyer may recover consequential damages.
Discussion. Many states have amended the UCC or enacted separate legislation to prohibit warranty disclaimers in consumer sales. Some states also enacted lemon laws that permit consumers to return new cars that dealers cannot repair.