Brief Fact Summary.
A & M Produce Co. sued FMC Corp. for breach of express and implied warranties when FMC’s farming equipment caused a tomato harvest to go awry.
Synopsis of Rule of Law.
A contract that contains a term that is procedurally and substantively unconscionable is void.
Abatti, who owned A & M Produce Co. (A & M) chose a bid with FMC Corp. (FMC) to purchase equipment to harvest tomatoes. FMC informed Abatti that he did not need a hydrocooler. Abatti signed an order form that disclaimed all warranties and consequential damages. The equipment did not sort the tomatoes fast enough and the lack of a hydrocooler caused the tomatoes to develop fungus. When A & M sought a refund, FMC refused. A & M sued for breach of implied and express warranties. The trial court ruled for A & M.
Whether an unconscionable contract is void?
Yes. The judgment of the trial court is affirmed. Sellers cannot disclaim representations that they have made. The contract remained procedurally unconscionable because FMC did not point out the contract’s terms to Abatti. Similarly, the contract remained substantively unconscionable because the order form disclaimed what the products were designed to do.
In considering whether a court should enforce a contract or a provision in a contract, the Supreme Court of New Mexico has suggested that the analysis of the contract should be placed in context, noting that the business conditions under which a contract was formed directly affect the parties relative bargaining power, reasonable expectations, and the commercial reasonableness of risk allocation as provided in the written agreement.View Full Point of Law
A contract that contains a term that is procedurally and substantively unconscionable is void. A contract is procedurally unconscionable if a contract term is hidden or causes unfair surprise. A contract is substantively unconscionable if a contract term is unfair or oppressive. A contract is void if it is both procedurally and substantively unconscionable.