Court Opinion

ID: 9720302
Source: CourtListenerOpinion
Date Created: 2023-08-26 08:25:10.762946+00
Date Added: 2024-06-11T18:24:15.582358
License: Public Domain

SULLIVAN, Justice,
dissenting.
There is much about Justice Boehm’s opinion in this important case with which I agree. Most importantly, I think we both agree that, notwithstanding the legislature’s enactment of the Products Liability Act, Indiana courts will enforce private agreements between sophisticated business entities that allocate between the entities the economic risk of products liability, under appropriate circumstances. Where we part company is in our definition of those circumstances. I dissent because I believe Justice Boehm’s definition sets the bar for enforceability too high.
I understand the rule of law announced by Justice Boehm’s opinion to be as follows: the Products Liability Act mandates that any disclaimer as to products liability with respect to a product covered by the Act will be ineffective unless there has been a “knowing waiver” of the purchaser’s rights thereunder.
The majority opinion takes the position, with which I generally agree, that because the legislature has acted in this area, it has made “choices that would otherwise be left to the court.” But if so, where is our authority to create the “knowing waiver” exception that is not provided for in the statute? Again I agree with Justice Boehm that that authority comes from the fact that the Products Liability Act, at least as originally adopted, codified the common law principles enunciated in Judge Eschbaeh’s Greeno opinion; to wit, where seller and buyer are parties to a contract, the Products Liability Act permits the seller to be relieved of products liability when “the total circumstances of the transaction indicate the buyer’s awareness of defects or acceptance of risk.” See Greeno v. Clark Equipment Co., 237 F.Supp. 427, 431 (N.D.Ind.1965).
Justice Boehm’s opinion transforms this “total circumstances” test into a “knowing waiver” test. Justice Boehm would find a knowing waiver only where (i) the underlying transaction was between “truly large and ‘sophisticated’ organizations,” (ii) “the amount of money involved ... was very large,” and (iii) “the parties did not simply trade printed forms, but rather entered into true negotiations over all the terms and conditions, including the allocation of risks from product defects and the contract explicitly waives strict liability claims.”
Justice Boehm’s rule may or may not be a good one but, in any event, I hope two things are clear. First, by virtue of the Products Liability Act’s incorporation of the common *1126law which permitted a “total circumstances” exception where seller and buyer are parties to a contract, the courts are authorized to define those circumstances. And, second, Justice Boehm’s particular definition of those circumstances is purely a policy choice by this court, not one in any way, shape or form mandated by the legislature.
Without belaboring the analysis, I would not set the bar to the enforceability of a products liability disclaimer nearly so high as does Justice Boehm. There are three general reasons for this.
First, fairly read, Greeno’s exception for transactions where the “total circumstances ... indicate the buyer’s awareness of defects or acceptance of risk,” is not limited to only “truly large organizations,” to deals where the amount of money involved is “very large,” or to contracts where the parties use “printed forms.” I would agree that the buyer must be sophisticated for this exception to operate but would not impose many, if any, additional qualifications than that to the plain language of Greeno.
Second, the fact remains that section 2-719 of the Uniform Commercial Code, Ind.Code § 26-1-2-719, was not repealed or limited by the language of the Products Liability Act. Here the legislature has expressly provided that, in transactions subject to the U.C.C., the parties may agree to limit the buyer’s remedies. I disagree with Justice Boehm that this provision is less specific than the Products Liability Act and think our duty here is to harmonize the two statutes to the extent possible. See Freeman v. State, 658 N.E.2d 68, 70 (Ind.1995) (citing Schrenker v. Clifford, 270 Ind. 525, 527, 387 N.E.2d 59, 60 (1979)) (where there are two statutes on the same subject, they should be construed together so as to harmonize and give effect to each, if possible, because they are in pari materia). Under my approach, the U.C.C. provision would retain much more of its vitality than it would under Justice Boehm’s.
Third, in several recent decisions, we have emphasized the very strong presumption of enforceability of contracts that represent the freely bargained agreement of the parties. See Continental Basketball Ass’n v. Ellenstein Enters., 669 N.E.2d 134, 139 (Ind.1996); Fresh Cut, Inc. v. Fazli, 650 N.E.2d 1126, 1129 (Ind.1995). I believe we should apply that same presumption in deciding when the “total circumstances” exception will apply.1 Freedom of contract permits a corporate purchaser to exercise its business judgment to forego claims for liability in exchange for a lower price. See, e.g., Keystone Aeronautics Corp. v. R.J. Enstrom Corp., 499 F.2d 146, 149 (3d Cir.1974). As a general matter, it should be for the marketplace, and not the courts, to decide whether such business judgments are correct. As the Tenth Circuit said in Keystone Aeronautics:
A social policy aimed at protecting the average consumer by prohibiting blanket immunization of a manufacturer or seller through the use of standardized disclaimers engenders little resistance. But when the setting is changed and the buyer and seller are both business entities, in a position where there may be effective and fair bargaining, the social policy loses its rai-son d’etre.
Keystone Aeronautics Corp., 499 F.2d at 149.2
*1127I would not affirm the trial court’s denial of McGraw-Edison’s motion for partial summary judgment but instead remand for further consideration in light of the principles set forth above.
SHEPARD, C.J., concurs.

. It is also true that cases like Continental Basketball Ass’n and Fresh Cut, Inc. recognize that there are circumstances under which Indiana courts will refuse to enforce private agreements. See also Straub v. B.M.T. by Todd, 645 N.E.2d 597 (Ind. 1994). To determine whether an otherwise valid agreement contravenes public policy, we have declared that balancing specific relevant considerations is necessary. Fresh Cut, 650 N.E.2d at 1130. Those considerations are: (i) the nature of the subject matter of the agreement; (ii) the strength of the public policy asserted; (iii) the likelihood that refusal to enforce the agreement will further that policy; (iv) how serious the forfeiture suffered by the party attempting to enforce the bargain would be; and (v) the parties’ relative bargaining power and freedom to contract. Id. These factors, rather than the big-company, big-money, no-printed-forms elements of Justice Boehm's "knowing waiver” test, would seem to me to be the relevant considerations in deciding whether a products liability disclaimer should be enforced.

. Courts from other jurisdictions have held that enforcing a limitation of liability agreement between two commercial entities against a strict liability claim does not violate the purpose behind products liability laws. See McDermott, Inc. v. Clyde Iron, 979 F.2d 1068, 1076 (5th Cir.1992), reversed in part on other grounds 511 U.S. 202, 114 S.Ct. 1461, 128 L.Ed.2d 148 *1127(1994); Idaho Power Co. v. Westinghouse Elec. Corp., 596 F.2d 924, 928 (9th Cir.1979); Lykes Bros. S.S. Co., Inc. v. Waukesha Bearings, 502 F.Supp. 1163 (E.D.La.1980); Salt River Project Agr. v. Westinghouse Elec., 143 Ariz. 368, 694 P.2d 198, 215 (1984). Contra In re Jones, 804 F.2d 1133 (10th Cir. 1986); Florida Steel Corp. v. Whiting Corp., 677 F.Supp. 1140 (M.D.Fla.1988); Westlye v. Look Sports, Inc., 17 Cal.App.4th 1715, 22 Cal.Rptr.2d 781 (1993); Spychalla Farms v. Hopkins Agr. Chemical, 151 Wis.2d 431, 444 N.W.2d 743 (App.1989).