Opinion ID: 198081
Heading Depth: 3
Heading Rank: 3

Heading: UCC Section 2-719(3): Unconscionability

Text: 58 In granting partial summary judgment to Adell, Judge Hornby ruled as a matter of law that Adell's inclusion of the damages-limitation clause in its invoice was not unconscionable. We agree. 59 Section 2-719(3) states that [c]onsequential damages may be limited or excluded unless the limitation or exclusion is unconscionable, see also UCC § 2-719(3) cmt. 3 ([S]uch terms [limiting damages] are merely an allocation of unknown or undeterminable risks.). Unconscionability is a question of law for the court. See, e.g., McNally Wellman Co. v. New York State Elec. & Gas Corp., 63 F.3d 1188, 1198 (2d Cir.1995); Porterco, Inc. v. Igloo Prods. Corp., 955 F.2d 1164, 1173 (8th Cir.1992). Since the doctrine of unconscionability primarily relates to the unequal bargaining power between a merchant and a non-merchant consumer, see LTV Energy Prods., 162 B.R. at 959-60 (noting that unconscionability doctrine requires the party invoking [it] to show both an absence of meaningful choice in the contract formation process and contract terms unreasonably favoring the other party, i.e., procedural and substantive unconscionability); see also UCC § 2-302 (Unconscionable Contract or Clause), it is not surprising that it is exceedingly rare that a clause in a commercial contract between merchants is deemed unconscionable. See White & Summers § 12-11, at 672 (Findings of unconscionability should be and are rare in commercial settings.) (citing Canal Elec. Co. v. Westinghouse Elec. Co., 973 F.2d 988, 996-97 (1st Cir.1992)); Winter Panel Corp. v. Reichhold Chems. Inc., 823 F.Supp. 963, 973 (D.Mass.1993) (noting that a damages-limitation clause is not unconscionable where it is a reasonable allocation of risks between two commercial entities). Further, Chipco neither contended that Adell's damages-limitation clause was insufficiently conspicuous nor that Chipco was otherwise deprived of an opportunity to review the Adell invoices. Thus, the mere failure to read invoices within its possession, standing alone, afforded Chipco no defense to the inclusion of a non-material term in the invoice pursuant to § 2-207(2) or 2-719. Both in its opposition to summary judgment, and on appeal, therefore, Chipco failed to establish unconscionability. See Celotex, 477 U.S. at 322, 106 S.Ct. 2548. 60