Opinion ID: 1192087
Heading Depth: 1
Heading Rank: 1

Heading: the limited remedy

Text: When a limited remedy fails to provide the minimum relief required by RCW 62A.2-719, it fails of its essential purpose. RCW 62A.2-719(2) provides: Where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in this Title. (Italics mine.) Comment 1 to RCWA 62A.2-719 explains that this subsection applies to an apparently fair and reasonable clause, which because of circumstances fails in its purpose or operates to deprive either party of the substantial value of the bargain .... Official Comment 1, RCWA 62A.2-719. Thus, unlike the substantive unconscionability analysis, the failure of essential purpose analysis `is not concerned with arrangements which were oppressive at their inception, but rather with the application of an agreement to novel circumstances not contemplated by the parties.' J. White & R. Summers, Uniform Commercial Code, § 12-10, at 466 (2d ed. 1980) (quoting 1 New York State Law Revision Comm'n, 1955 Report 584). Applying this analysis in the instant case, it is clear that the limited remedy made available to Indian Wells failed of its essential purpose. In paragraph 1.1 of the parties' contract, Mt. Arbor agreed to grow for Indian Wells 700,000 apple trees, using all growing and cultural practices standard within the nursing industry ... and taking all appropriate and reasonable action which, in [Mt. Arbor's] judgment may be necessary to ... protect the Trees ... until delivery to [Indian Wells]. This statement by Mt. Arbor constitutes an express warranty. [7] The limited remedy provided in the event of a breach of this warranty can be found in paragraph 5 of the parties' contract. Paragraph 5.1 provides in relevant part: Any claim made pursuant to the terms of Paragraph 1 shall be made by written notice to [Mt. Arbor] within fifteen (15) days of delivery.... If no written notice is received by [Mt. Arbor] within the specified period, then it shall be deemed that [Indian Wells] has received and accepted the Trees. .. . Normally, a buyer who has accepted goods has the right to revoke acceptance upon the discovery of latent defects and to recover damages. RCW 62A.2-608. However, paragraph 3.4 of the parties' agreement provides that, after delivery, Indian Wells accepts all risk of loss to the trees. The practical effect of these contractual provisions is to deny Indian Wells any remedy for defects not discoverable within 15 days of delivery which were caused by Mt. Arbor's failure to use standard growing practices and to protect the trees. The trial court recognized the lack of remedy available to Indian Wells: [W]hen you accept this language that is in this contract right now as I read it, it just says that, If something happens to his [ sic ] these trees, no matter what it is, we don't pay you anything. It's an all or nothing contract, quite frankly. The only thing that is in the contract as far as any remedy is concerned is, If we don't deliver you some trees, then you don't pay us for them. That's it, period. And whatever else may have occurred or anything else like that, there is just no remedy at all.... There just is no remedy, period. Trial Judge's oral ruling, at 22 (Aug. 7, 1987). Thus, this contract involves precisely the situation that RCW 62A.2-719(2) was intended to address. At the time the parties entered the contract, there was no reason to believe that requiring Indian Wells to make a claim within 15 days of delivery would not provide an adequate remedy for any breach of the contract. Clearly what was contemplated by the parties was the use of standard growing techniques in the development of normal trees. If such had been the case, the remedies provided by the contract would have been adequate. [8] But standard growing techniques were not used. In the majority's own words, Prior to planting the grafted and the to-be-budded rootstocks in 1984, Mt. Arbor dipped the rootstocks in ... Ridomil 2E. Ridomil 2E is considered by its manufacturer to be an extremely erratic chemical which can, and does, cause damage to rootstocks at lesser concentrations than those used by Mt. Arbor. Majority, at 221. The trial court determined this rootstock dipping was not only unwise but also a violation of state and federal pesticide laws. When, as a direct result of Mt. Arbor's misuse of Ridomil, the trees died after planting, Indian Wells was left with no remedy. Thus, an apparently fair and reasonable clause, i.e., the 15-day limitation period, worked to deprive Indian Wells of the substantial value of its bargain through novel circumstances not contemplated by the parties.' J. White & R. Summers, Uniform Commercial Code § 12-10, at 466 (2d ed. 1980) (quoting 1 New York State Law Revision Comm'n, 1955 Report 584). See also Wilson Trading Corp. v. David Ferguson, Ltd., 23 N.Y.2d 398, 244 N.E.2d 685, 297 N.Y.S.2d 108 (1968) (in contract for sale of yarn, clause precluding claims made more than 10 days after receipt of shipment fails of essential purpose if latent defects render yarn unmerchantable); Earl M. Jorgensen Co. v. Mark Constr., Inc., 56 Hawaii 466, 540 P.2d 978 (1975) (alternative remedies of refund and repair/replacement fail because latent defects caused additional damages).