Opinion ID: 675175
Heading Depth: 2
Heading Rank: 3

Heading: IBM's Limited Remedy of Repair or Replace

Text: 27 TCA next argues that the district court erred in holding that IBM and ICC effectively limited the remedy to repair or replace. TCA argues IBM's limited warranty of repair or replace failed of its essential purpose because there was a latent defect and the remedy provided for in the warranty was not provided. 28 Under Minnesota law, [a]n exclusive remedy fails of its essential purpose if circumstances arise to deprive the limiting clause of its meaning or one party of the substantial value of its bargain. Durfee v. Rod Baxter Imports, Inc., 262 N.W.2d 349, 356 (Minn.1977) (Durfee), citing Minn.Stat.Ann. Sec. 336.2-719, U.C.C. Comment 1. A repair or replace clause does not fail of its essential purpose so long as repairs are made each time a defect arises. Durfee, 262 N.W.2d at 356. 29 It is undisputed that IBM repaired the disk drive after it failed. TCA argues that latency of the defect in and of itself mandates that the limited remedy of repair or replace fails of its essential purpose. TCA cites no cases that hold that a remedy of repair failed of its essential purpose when, after a single failure, the system was fully repaired within one day, and so the rule from Durfee controls and the remedy is adequate. 30 TCA further claims that IBM's failure to replace the defective disk drive before the malfunction occurred caused the remedy to fail of its essential purpose. The computer system was fully operational between the time the computer system first revealed an error code for the disk drive and the time the disk drive failed. The drive failure occurred two days after the error code was revealed and one day before IBM was scheduled to perform diagnostic service. When the disk failed, IBM provided warranty service on the disk drive and repaired it. Given these undisputed facts, IBM's remedy of repair or replace did not, as a matter of law, fail of its essential purpose. 31