Interpretation · Feb 8
Floor. ~40 min: UCC § 2-316 disclaimer mechanics + Carlson on unconscionable disclaimers.
Target. ~75 min: Floor + Ardagh on conspicuousness + Magnuson-Moss + UCC § 2-719 remedy limits + worked examples.
(1) Words or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit warranty shall be construed wherever reasonable as consistent with each other; but subject to the provisions of this Article on parol or extrinsic evidence (Section 2-202) negation or limitation is inoperative to the extent that such construction is unreasonable.
(2) Subject to subsection (3), to exclude or modify the implied warranty of merchantability or any part of it the language must mention merchantability and in case of a writing must be conspicuous, and to exclude or modify any implied warranty of fitness the exclusion must be by a writing and conspicuous. Language to exclude all implied warranties of fitness is sufficient if it states, for example, that “There are no warranties which extend beyond the description on the face hereof.”
(3) Notwithstanding subsection (2)
(a) unless the circumstances indicate otherwise, all implied warranties are excluded by expressions like “as is”, “with all faults” or other language which in common understanding calls the buyer’s attention to the exclusion of warranties and makes plain that there is no implied warranty; and
(b) when the buyer before entering into the contract has examined the goods or the sample or model as fully as he desired or has refused to examine the goods there is no implied warranty with regard to defects which an examination ought in the circumstances to have revealed to him; and
(c) an implied warranty can also be excluded or modified by course of dealing or course of performance or usage of trade.
(4) Remedies for breach of warranty can be limited in accordance with the provisions of this Article on liquidation or limitation of damages and on contractual modification of remedy (Sections 2-718 and 2-719).
§ 2-316 gives sellers distinct disclaimer routes — and each warranty type has its own formula:
(1) If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract.
Even a disclaimer that clears § 2-316's word-and-visibility gates can be struck down as unconscionable under § 2-302. The inquiry has two prongs, usually both required:
No supplier may disclaim or modify (except as provided in subsection (b)) any implied warranty to a consumer with respect to such consumer product if (1) such supplier makes any written warranty to the consumer with respect to such consumer product, or (2) at the time of sale, or within 90 days thereafter, such supplier enters into a service contract with the consumer which applies to such consumer product.
For consumer products, federal law overrides the UCC's permissive disclaimer regime. Magnuson-Moss § 2308(a):
Scope limit. Magnuson-Moss reaches only consumer products — goods normally used for personal, family, or household purposes. Commercial/B2B sales (like Ardagh's cans) stay on the pure UCC track.
883 F.2d 287 (4th Cir. 1989)
United States Court of Appeals for the Fourth Circuit
Rule. A limitation of remedies and disclaimer of implied warranties may be unconscionable under UCC § 2-302 when applied to consumer goods with inherent defects known to the seller. The unconscionability inquiry is factual; summary disposition is improper when the seller's knowledge and the impact on consumers raise triable issues.
718 F. Supp. 3d 871 (W.D.N.Y. 2024)
United States District Court for the Western District of New York
Rule. A warranty disclaimer under UCC § 2-316 must be conspicuous: sufficient that a reasonable person ought to notice it. Capitalization alone, without bold, color, distinct heading, or prominent placement, does not satisfy the conspicuousness requirement.
Facts. Consumer buys a used car from a dealer for $8,000. The contract has a bold red stamp at the top: "SOLD AS IS — NO WARRANTIES OF ANY KIND." Three weeks later the transmission fails; repair quote is $4,500. Consumer sues for breach of implied warranty of merchantability.
Question. Does the "as is" stamp under UCC § 2-316(3)(a) exclude the implied warranty?
Answer. § 2-316(3)(a): "as is," "with all faults," or similar language excludes all implied warranties — unless circumstances indicate otherwise. Two qualifications: (1) the language must be such that "in common understanding" it calls attention to the exclusion; the bold red stamp passes. (2) Magnuson-Moss bars disclaimer of implied warranties when the seller provides a written warranty on a consumer product. If the dealer''s "as is" stamp accompanies any written warranty (e.g., on the title transfer, in a satisfaction guarantee, in a service contract within 90 days), the disclaimer is void as to implied warranties.
Result depends on whether any written warranty accompanied the sale. If yes, Magnuson-Moss preempts the "as is" exclusion. If no, "as is" stands.
(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 non-conforming 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.
Two distinct moves a seller makes — keep them in separate boxes:
Facts. Manufacturer sells industrial machinery with a written warranty: "Buyer''s sole and exclusive remedy is repair or replacement of defective parts." Machine breaks down repeatedly; manufacturer attempts repair seven times over 18 months. Each repair fixes one symptom and creates another. Buyer sues for consequential damages (lost production); manufacturer invokes the exclusive-remedy clause.
Question. Does the clause bar consequential damages?
Answer. UCC § 2-719(2): "Where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in this Act." A repair-or-replace remedy fails of its essential purpose when the seller is unable or unwilling to repair within a reasonable time. Seven failed attempts over 18 months satisfies the "fails of its essential purpose" test in most jurisdictions. The clause is set aside. Buyer can pursue full UCC remedies including consequential damages, unless a separate § 2-719(3) consequential-damages exclusion applies and survives unconscionability scrutiny under § 2-302.
Two-step: (1) does the limited remedy fail its essential purpose? (2) if yes, does a separate consequential-damages bar still operate? Different jurisdictions split on whether failure of the limited remedy automatically voids the consequential bar.
Stretch problems from the chapter.
Rules. UCC § 2-316 (disclaimer), UCC § 2-302 (unconscionability), UCC § 2-719 (remedy limits); Magnuson-Moss Warranty Act § 2308 (consumer-product floor).
Cases. Carlson v. General Motors Corp. (unconscionable disclaimer) · Ardagh Metal Packaging v. American Craft Brewery (conspicuousness).
Punchline. A disclaimer must clear four gates: right WORDS, CONSPICUOUS, no Magnuson-Moss bar (consumer products), and not UNCONSCIONABLE. And disclaiming the warranty (§ 2-316) is a different move from capping the remedy (§ 2-719) — each fails on its own terms.
Open question. Module V (Interpretation) closes here. The next question: when does the duty to perform actually arise? Conditions are next.
Next class: Module V Capstone: Interpretation
_Interpretation_ · Feb 11
Module quiz, debrief, and Redline Challenge skills assessment. Bring the parol-evidence funnel and the warranty disclaimer checklist. One question across the module: when the writing is silent or unclear, where does the meaning come from — the words, the parties, the trade, or the court? Come ready to answer. You may be called.