Printable Format84-2-719. Contractual modification or limitation of remedy. (1) Subject to the provisions of subsections (2) and (3) of this section and of the preceding section on liquidation and limitation of damages,
(a) the agreement may provide for remedies in addition to or in substitution for those provided in this article and may limit or alter the measure of damages recoverable under this article, as by limiting the buyer's remedies to return of the goods and repayment of the price or to repair and replacement of nonconforming goods or parts; and
(b) resort to a remedy as provided is optional unless the remedy is expressly agreed to be exclusive, in which case it is the sole remedy.
(2) Where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in this act.
(3) Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable. Limitation of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable but limitation of damages where the loss is commercial is not.
History: L. 1965, ch. 564, § 115; January 1, 1966.
KANSAS COMMENT, 1996
1. This section generally leaves the parties free to shape their own remedies by contract and to limit or modify the remedies authorized by Article 2. The right to do so is not unlimited, however, and Official Comment 1 indicates that at least minimum adequate remedies must be available. The freedom of contract provided by this section is subject to the unconscionability provision of 84-2-302, as well as the common law defenses of fraud, mistake, duress, or the like, see 84-1-103. Unlike section 84-2-316 on warranty disclaimers, however, this section does not require that a clause modifying remedies be conspicuous or contain any particular language. See, e.g., Xerox Corp. v. Hawkes, 124 N.H. 610, 475 A.2d 7 (1984).
2. Paragraph (1)(a) provides that agreements to limit or modify remedies generally are valid. Paragraph (1) (b) states the presumption that resort to any remedy provided by contract is optional. See Kelley Metal Trading Co. v. Al-Jon/United, Inc., 835 F. Supp. 1339 (D. Kan. 1993) (finding buy-back provision not intended to be exclusive remedy). If the parties do not explicitly agree that the remedy is to be exclusive, all of this Article's remedies are available to the party. For a discussion of the applicability of a limitation of remedy clause to a downstream purchaser, see Olathe Mfg., Inc. v. Browning Mfg., 259 K. 735, 915 P.2d 86 (1996).
3. In addition, if an exclusive contractual remedy "fail[s] of its essential purpose," subsection (2) permits the aggrieved party to resort to any remedy under Article 2. A remedy limitation may fail of its essential purpose when, for example, the seller has agreed to repair or replace defective parts, but after several attempts is unable or unwilling to do so. For an illustrative case, see Beal v. General Motors Corp., 354 F. Supp. 423 (D. Del. 1973). Whether a limited remedy fails of its essential purpose is a question of fact. Elite Professionals, Inc. v. Carrier Corp., 16 K.A.2d 625, 827 P.2d 1195 (1992).
4. Under subsection (3), contractual limitations on consequential damages are permitted unless unconscionable. See Kansas City Structural Steel Co. v. L.G. Barcus & Sons, Inc., 217 K. 88, 535 P.2d 419 (1975); Steele v. J.I. Case Co., 197 K. 554, 419 P.2d 902 (1966). Kansas courts have not yet decided whether a contractual limitation on consequential damages remains effective when an exclusive contractual remedy fails of its essential purpose. See Ritchie Enter. v. Honeywell Bull, Inc., 730 F. Supp. 1041 (D. Kan. 1990) (applying Massachusetts law). See generally Barkley Clark & Christopher Smith, The Law of Product Warranties § 8.04[2][b] (1984 & Supp. 1996). The special rule for sales of consumer goods, making limitation or exclusion of consequential damages for personal injury prima facie unconscionable, is likely to be unimportant in Kansas. Instead, the issue likely will be controlled by the Kansas Consumer Protection Act (KCPA), K.S.A. 50-623 et seq., which flatly prohibits, in consumer cases, any limitation on remedies for breach of implied warranties and declares that any such limitation is void. K.S.A. 50-639 (a) & (e); see Winchester v. Lester's of Minnesota, Inc., 983 F.2d 992 (10th Cir. 1993) (applying Kansas law).
Law Review and Bar Journal References:
Subsection (3) mentioned with reference to the limitation of express warranties, Fred N. Six, 16 K.L.R. 137, 145 (1967).
Subsection (3) discussed in "Uniform Commercial Code—Unconscionability," Robert D. Ochs, 7 W.L.J. 415 (1968).
Case law regarding enforceability of disclaimer discussed, Norman E. Beal, 16 K.L.R. 285, 299 (1968).
Survey of Kansas commercial law (1965-1969), 18 K.L.R. 388, 391 (1970).
Concerning attempts to limit consequential damages for injuries to the person in the case of consumer goods, John B. Roesler, 19 K.L.R. 251, 255 (1971).
"Beefing Up Product Warranties: A New Dimension In Consumer Protection," Barkley Clark, Michael J. Davis, 23 K.L.R. 567, 576, 577, 579, 580, 583, 584, 585, 588, 591, 593, 594, 612 (1975).
Subsection (3) mentioned in comment, "U.C.C.—Limitations on Personal Injury Damages for Breach of Warranty," 14 W.L.J. 714 (1975).
Strict liability in tort as adopted in Kansas, 25 K.L.R. 462, 468 (1977).
Survey of contracts, UCCC and UCC, Franklin E. Lynch and Larry Schneider, 15 W.L.J. 324, 328 (1976).
Subsection (3) mentioned in "Comparative Fault and Strict Products Liability in Kansas: Reflections on the Distinction Between Initial Liability and Ultimate Loss Allocation," William Edward Westerbeke and Hal D. Meltzer, 28 K.L.R. 25, 97 (1979).
"Privity of Contract and Economic Losses: 'Watchman, What of the Night?'" Alan T. Blinzler and Stephen M. Fitzgerald, 11 J.K.T.L.A. No. 1, 13 (1987).
"The Untapped Potential of the Kansas Consumer Protection Act," Amy Fellows, 74 J.K.B.A. No. 4, 24 (2005).
CASE ANNOTATIONS
1. Liability for consequential damages may be limited by warranty terms unless inequitable. Steele v. J. I. Case Co., 197 Kan. 554, 563, 419 P.2d 902.
2. Exculpatory damage clause under contract construed and held not unconscionable. Kansas City Structural Steel Co. v. L. G. Barcus & Sons, Inc., 217 Kan. 88, 94, 535 P.2d 419.
3. Limitations on buyer's remedies discussed; nine factors relevant to unconscionability outlined and applied; absent express term to contrary, term constituting usage of trade is binding term of agreement. Trans-america Oil Corp. v. Lynes, Inc., 723 F.2d 758, 764, 765 (1983).
4. Cited; implied warranties not extended to remote seller or manufacturer of product not inherently dangerous for economic loss without privity. Professional Lens Plan, Inc. v. Polaris Leasing Corp., 234 Kan. 742, 754, 755, 675 P.2d 887 (1984).
5. Sales contract precluding consequential damages not unconscionable based solely on supplier's alleged bad faith. Zuru Constructors, Inc. v. B.F. Goodrich Co., 746 F. Supp. 1051, 1056 (1990).
6. Provisions in contract limiting time for filing suit as provided in K.S.A. 84-2-725 examined. Vanier v. Ponsoldt, 251 Kan. 88, 109, 833 P.2d 949 (1992).
7. Whether limited remedy failed of essential purpose is question of fact, summary judgment reversed and remanded. Elite Professionals, Inc. v. Carrier Corp., 16 Kan. App. 2d 625, 636, 637, 638, 827 P.2d 1195 (1992).
8. Contractual exclusion of implied warranties was void under Kansas consumer protection act. Winchester v. Lester's of Minnesota, Inc, 983 F.2d 992, 993, 996 (1992).
9. Whether remedy was expressly designated as exclusive precluding all other UCC remedies examined. Kelley Metal Trading Co. v. Al-Jon/United, Inc., 835 F. Supp. 1339, 1345 (1993).
10. Express warranty limitation of repair and replacement on sale of goods did not apply to buyer. Olathe Mfg., Inc. v. Browning Mfg., 259 Kan. 735, 745, 915 P.2d 86 (1996).
10. Issue regarding whether limited warranty in sale contract would deprive plaintiff of value of bargain precluded summary judgment. Champlain Enterprises, Inc., v. U.S., 957 F. Supp. 26, 29 (1997).
11. Warranties that are disclaimed are not revived because an exclusive remedy failed its essential purpose. Griffitts & Coder Custom Chopping v. CNH Ind. Am., 438 F. Supp. 3d 1206, 1238 (D. Kan. 2020).