Opinion ID: 316383
Heading Depth: 1
Heading Rank: 1

Heading: Loss of Profits

Text: 18 In support of its contention that it was error for the court below to submit the question of lost profits to the jury, CEI argues, alternatively, that the contract absolved it from any liability to SNI for loss of profits, or, even if it might otherwise be so liable, the evidence adduced at trial was too remote and speculative to justify submitting that issue to the jury. Because we agree with appellant's position with respect to the effect of the contract, we find it unnecessary to discuss the sufficiency of the evidence of lost profits. 19 In Gramling v. Baltz (1972), 253 Ark. 361, 485 S.W.2d 183, the Arkansas Supreme Court was faced with the assertion that 2-719 of the Arkansas Uniform Commercial Code, Ark.Stat.Ann. 85-2-719 (Add.1961), conditions the enforceability of contractual limitations or exclusions of liability for consequential damages on a single factor-- that such limitations not be unconscionable. While it agreed that freedom from unconscionability was one criterion of validity, the court went further, stating that such contractual limitations must also be phrased in 'clear and unmistakable language,' citing with approval the following disclaimer upheld in Southwest Forest Indus. v. Westinghouse Elec. Corp. (9th Cir., 1970), 422 F.2d 1013, cert. denied (1970), 400 U.S. 902, 91 S.Ct. 138, 27 L.Ed.2d 138: 'Westinghouse shall not be liable for consequential damages.' See Council Bros. v. Ray Burner Co. (5th Cir. 1973), 473 F.2d 400. 20 Both parties seem to agree that Gramling represents the Arkansas law on limitations of remedy. 1 SNI, however, takes issue with CEI's characterization of its disclaimer as 'clear and unmistakable.' Pointing to the fact that the front page of the contract contains language expressly guaranteeing the nitrogen plant to have a certain capacity, SNI claims that the disclaimer buried on the back of the contract 'deep in the WARRANTY section of (CEI's) preprinted form' is ineffective as a modification of CEI's liability for the express guarantee of capacity. If the disclaimer is to be accorded any force at all, SNI asserts, it should be limited solely to liability for breach of the warranties contained in the WARRANTY paragraph itself. 21 With this position we cannot agree. Clearly, in view of the expertise of the negotiators of this agreement (SNI's Wynne being a highly respected and knowledgeable commercial lawyer of some 18 years' standing and CEI's Lorenz being an engineer with some 24 years' experience in production and management in the cryogenics industry) and the complete absence of any evidence of a disparity of bargaining power the limitation of remedy was not unconscionable. See K & C Inc. v. Westinghouse Elec. Corp. (1970), 437 Pa. 303, 263 A.2d 390. 22 Nor can it validly be claimed that the limitation was unclear or misleading. The record indicates that Wynne was familiar with the WARRANTY paragraph as early as August 9, 1969, approximately four months before CEI sent SNI its final proposal. In addition, the contract contains a sentence immediately preceding the express guarantee relied on by SNI to the effect that that guarantee is subject to the conditions of sale-- including the disclaimer-- appearing on the reverse side of the contract. Finally, not even SNI contends that the limitation is phrased in equivocal language. Thus, we are convinced that the challenged limitation, phrased as it is and placed in the WARRANTY paragraph in the contract is not misleading. It is just such a clear and unmistakable disclaimer of liability for loss of profits as was held valid in Southwest Forest Indus. v. Westinghouse Elec. Corp., supra, and approved in Gramling. Accordingly, we hold that it was error to submit the issue of liability for lost profits to the jury.