Court Opinion

ID: 9701589
Source: CourtListenerOpinion
Date Created: 2023-08-25 22:26:28.043579+00
Date Added: 2024-06-11T18:21:25.497212
License: Public Domain

CLIFFORD, J.,
dissenting.
This case asks whether it is unconscionable for a manufacturer to limit liability to product replacement and to exclude liability for property damage in the event of failure of a non-defective product. Both the trial court and the Appellate Division answered in the affirmative. However, the Court goes out of its way to avoid addressing this, the salient issue, choosing instead to decide the case on the basis of a supposed antecedent question: whether the remedy limitation is so deceptive, confusing or misleading as to be unconscionable. Id.
The answer given represents a cogent discourse on the concept of unconscionability in contracts law. However interesting that discussion may be, it is entirely academic, for the issue addressed is not before us now. The question of the alleged deceptive pall *343of the remedy limitation was not raised in either of the courts below. It was not briefed by the parties. It was not contained in the certification papers before us. To the limited extent that it was adverted to at oral argument, counsel for both parties denied that such an issue was before the Court. The questions that are-squarely posed, however, which I daresay sound, basic principles of jurisprudence should dispose us to answer, are these:
1. Does a guarantee provision promising replacement of the product in the event of product failure constitute an express warranty?
2. Is it unconscionable for a manufacturer to limit liability to product replacement and to exclude liability for property damage in the event of failure of a non-defective product?
I
Uniroyal distributed to the purchasers of its steel belted radial tires a thirteen page red, black and white booklet entitled “Owner’s Guide and Guarantee.” Among the things described in the booklet are how and when to rotate, align and replace the tires, the terms of the tire guarantee, and service and inspection routines. Only two pages of the thirteen page booklet deal with Uniroyal’s guarantee. These pages are divided into six subheadings printed and set off in bold-face red type:
1. GUARANTEE ELIGIBILITY.
2. WHAT IS GUARANTEED AND FOR HOW LONG.
3. HOW PRO RATA CHARGES ARE CALCULATED.
4. WHAT IS NOT COVERED BY THE GUARANTEE.
5. UNIROYAL’S OBLIGATIONS.
6. OWNER’S OBLIGATIONS.
The terms of the guarantee are then explained in language which I confess strikes me more as a model of clarity and precision than as the “linguistic maze” or the “melange of overlapping, variant, misleading and contradictory provisions” perceived by the majority, ante at 333. Here are the pertinent guarantee terms:
1. GUARANTEE ELIGIBILITY
(a) General guarantee
Applies To All Owners Of:
* Passenger Cars
* Light Trucks
*344* Recreational Vehicles
* Rental and Lease Vehicles
(b) Road Hazards
Applies To All Owners Of:
* Passenger Cars Including Rental and Lease Vehicles in Passenger Car Service
(c) Mileage
Applies To the Original Owner Of
* Passenger Cars Including Rental and Lease Vehicles in Passenger Car Service
2. WHAT IS GUARANTEED AND FOR HOW LONG
Your set of Uniroyal Steel Belted Radial Tires is guaranteed for 40,000 vehicle odometer miles as follows:
(a) General Guarantee—If a tire becomes unserviceable, for any reason other than wearout or the specific road hazards covered below during the first 8,000 miles of operation, it will be replaced at no charge. Thereafter, adjustments will be made on a pro rata charge basis up to 40,000 vehicle odometer miles.
(b) Road Hazard Protection—If within 40,000 vehicle odometer miles the tire becomes unrepairable due to impact breaks, snags, cuts or punctures, it will be replaced on a pro rata charge basis.
(c) Mileage—If the tread on any tire wears down to the tread wear indicators (as defined on page 5, section 1) before 40,000 vehicle odometer miles, the tire will be replaced with a new tire on a pro rata charge basis.
3. HOW PRO RATA CHARGES ARE CALCULATED
********
4. WHAT IS NOT COVERED BY THE GUARANTEE
(a) General Exclusions applicable to all parts of guarantee.
* Unserviceability or unrepairability or failure or loss due to accident, fire, chain damage, racing, theft, run flat or willful abuse.
* Tires on any car registered and normally operated outside the United States or Canada.
* This guarantee is a promise of replacement under the conditions specified. It is not a promise that your tires will not fail.
* This guarantee is given in lieu of all other express or implied warranties, including but not limited to any implied warranties of merchantability or fitness for a particular purpose. It does not cover consequential damages and UNIROYAL’s liability is limited to repairing or replacing the tire in accordance with the stipulations contained in this guarantee.
* Tires transferred from the vehicle on which they were originally installed.
(b) Road Hazard Exclusions
* Tires used on trucks, recreational vehicles, campers, trailers and passenger ears in special applications such as police and taxi service.
* Mileage guarantee voided if booklet is lost or mandatory inspections, rotations and wheel alignment and balance checks and adjustment, if required, are not made, or if tires are operated at improper inflation.
********
*345The Court holds that these provisions, while labeled as a “guarantee,” have the force and effect of an express warranty. Ante at 326. This conclusion, with which I agree, is in accord with settled principles of law. See, e. g., Jutta’s Inc. v. Fireco Equipment Co., 150 N.J.Super. 301 (App.Div.1977); Adams v. Peter Tramontin Motor Sales, Inc., 42 N.J.Super. 313 (App.Div. 1956); N.J.S.A. 12A:2-313.
However, it is at this point that I part company with my colleagues. It is not significant whether the tire replacement policy is called a guarantee or a warranty. Neither term has talismanic significance portending immortality for tires, the palladium of motoring, or perpetual immunity from traffic summonses. Once the affirmative statements made by Uniroyal are deemed to be express warranties, the next step is to determine their scope.
It is a matter of common knowledge, judicially recognized, that tires can and will blow out for a myriad of reasons including defect, lack of tire maintenance, road conditions, and the happenstance of striking damaging objects. Collins v. Uniroyal, Inc., 64 N.J. 260, 271 (1974) (dissenting opinion); see Shramek v. General Motors Corp., 69 Ill.App.2d 72, 216 N.E.2d 244, 247 (App.Ct.1966); Williams v. U. S. Royal Tires, 101 So.2d 488, 492 (La.Ct.App.1958). Uniroyal recognized this and sought to circumscribe its affirmative guarantees accordingly.
Unlike the provisions of the warranty in Collins, supra, Uniroyal here made no affirmative guarantee against specific causes for failure of the tires. Rather, it made a promise of replacement under certain specified conditions. Uniroyal further stated, in unmistakable terms, that it was not making a promise that the tires would not fail.
We analyzed a similar guarantee in Herbstman v. Eastman Kodak Co., 68 N.J. 1 (1975). In Herbstman the plaintiff wanted the purchase price of his malfunctioning camera refunded. This Court held that plaintiff’s remedy was limited to that stated in the guarantee, namely, repair. In interpreting the Herbstman guarantee we decided that the manufacturer did not warrant *346the camera to be free of mechanical defects. “Rather, the language used contemplated that such defects might occur, and, if so, Kodak would repair them.” Id. at 12.
Like the guarantee in Herbstman, the scope of the guarantee here is clear. Uniroyal specifically stated:
This guarantee is a promise of replacement under the conditions specified. It is not a promise that your tires will not fail.
The meaning and significance of this guarantee is manifest. It could scarcely be made more plain. However, in its attempt to distinguish Herbstman and render the Uniroyal guarantee unconscionable, ante at 334-335, the majority subjects the language of the guarantee before us to a myopic scrutiny, dilating the words until they are devoid of any definition. Having ravaged the guarantee, the Court ends its analysis short of reaching the real issue in the case.
II
The provisions in the Uniroyal guarantee constitute a limitation of remedy.1 N.J.S.A. 12A:2-719(3) specifically provides that consequential damages may be limited or excluded unless such limitation or exclusion be unconscionable. The statute further states that it is “prima facie” unconscionable to limit consequential damages for personal injuries in the case of consumer goods. Id. The question squarely before the Court is whether such a presumption of unconscionability should be extended to consequential damages for property damage.
*347The answer to this question is clearly no. The statute distinguishes remedy limitations for personal injuries from remedy limitations for property damage. N.J.S.A. 12A:2-719(3). The latter are acceptable and legitimate exercises of contractual freedom by manufacturers. See Adams v. J. I. Case Co., 125 Ill.App.2d 388, 261 N.E.2d 1 (App.Ct.1970); Lankford v. Rogers Ford Sales, 478 S.W.2d 248 (Ct.Civ.App.Tex.1972); Murray v. Holiday Rambler, Inc., 83 Wis.2d 406, 265 N.W.2A 513 (1978); cf. Ford Motor Co. v. Reid, 250 Ark. 176, 465 S.W.2d 80, 85 (1971) (“If the Ford Motor Company intended the repair remedy to be exclusive, as it now contends, it should have stated that intention in express language”). As the Oklahoma Supreme Court noted in Tuttle v. Kelley-Springfield Tire Co., 585 P.2d 1116, (Okl.Sup.1978), “[CJertainly a seller should be able to escape no-fault liability. But this must be achieved in some manner not violative of the code. .For example a seller might provide that he does not guarantee the tire will not blow out, but if it does he promises to replace it.” Id. at 1120. The Tuttle court also noted that limitations on remedies are not per se unconscionable. Id. Those courts which have dabbled in the language of unconscionability when examining limitations for property damage have found the limited remedy to be “not unconscionable on its face” but unconscionable as applied. Ford Motor Co. v. Mayes, 575 S. W.2d 480, 485 (Ky.App.1978) (incurable noise and vibration from truck frame); Eckstein v. Cummins, 41 Ohio App.2d 1, 321 N.E.2d 897, 904 (Ct.App.1974), rev’d on other grounds, 46 Ohio App.2d 192, 347 N.E.2d 549 (Ct.App. 1975) (constant vibration and hum in automobile incapable of repair due to inability to isolate defective part).
The judicial refusal to find remedy limitations prima facie unconscionable in the case of property damage is supported by a close reading of the Uniform Commercial Code, embodied in this state in Title 12A. N.J.S.A. 12A:2-719(3), the section under scrutiny, deals exclusively with consequential damages. N.J. S.A. 12A:2-715(2) defines consequential damages as follows:
(2) Consequential damages resulting from the seller’s breach include
(a) any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and
*348(b) injury to person or property proximately resulting from any breach of warranty. [L.1961, c. 120, § 2-715 (emphasis added).]
Injuries to person and to property are distinguished here. It is apparent, then, that the drafters did not intend the terms to be synonymous in later sections, e. g., N.J.S.A. 12A:2-719(3).
This distinction was emphasized in passing by this Court in Heavner v. Uniroyal, Inc., 63 N.J. 130 (1973). In Heavner, a conflicts of law ease dealing with statutes of limitation, the Court quoted N.J.S.A. 12A:2-719(3), adding the parenthetical “not to property” after the phrase “damages for injury to the person.” Id. at 154.
The Appellate Division would extend the presumption of unconscionability in Collins v. Uniroyal, Inc., where limitations on remedy for personal injuries are involved, to situations such as the one before us involving only property damage. But that extension as applied to a non-defective product’s damage to property conflicts with the plain meaning of the statute. It further precludes the manufacturer from limiting its liability in any way and has the effect of making the manufacturer an insurer of the public. See Collins v. Uniroyal, Inc., supra, 64 N.J. at 263, 272 (dissenting opinion); Note, “Presumptions of Unconscionability and Nondefective Products under the Uniform Commercial Code,” 50 N.Y.U.L.Rev. 148 (1975).
The purpose of the limitation of remedy here was to enable the manufacturer to make a warranty for non-defective goods beyond that imposed by law without “opening wide the floodgate of claims.” Collins v. Uniroyal, Inc., supra, 64 N.J. at 271 (dissenting opinion). As noted in the dissent in Collins, the effect of such a clause is laudable in its allowance of this extra degree of guarantee. Id. at 272. The effect of ignoring the limitation of remedy here will necessarily be to discourage the making of such promises of replacement.2
*349Uniroyal’s promise here to replace the product in accordance with the conditions specified goes beyond the minimum warranty required by law. This is not to suggest altruism on the part of the manufacturer but rather to point out that it is at least ironic and probably unfair to predicate liability on an act which is inherently beneficial to the consumer. As has been noted by one commentator, the Court’s holding in Cbllins “places sellers in a strange bind. They cannot give consumers something extra in the way of remedies without assuming total liability for any personal injuries caused by the failure of non-defective products. On the other hand, they can refrain from making express warranties and avoid liability for anything but defective products.” Note, supra, N.Y.U.L.Rev. at 175-76.
Ill
For the foregoing reasons I would reverse the judgment of the Appellate Division which remanded the cause for a determination of whether the express warranty was breached. On the assumption, nowhere contradicted in the record, that Uniroyal has discharged or is willing to discharge its liability to plaintiff by replacing the non-defective tire, I would remand to the trial court for the entry there of judgment in favor of appellant.
For modification and affirmance—Chief Justice WILENTZ and Justices SULLIVAN, PASHMAN, SCHREIBER, HANDLER and POLLOCK—6.
For reversal and remandment—Justice CLIFFORD—1.

The majority correctly distinguishes between disclaimers of warranty and limitations of remedy. Ante at 330-331. The exclusion or modification of warranties is covered under N.J.S.A. 12A:2-316. The limitation or modification of remedies is found in N.J.S.A. 12A:2-719. There are strong indications that the legislature, following the lead of the drafters of the Uniform Commercial Code, intended N.J.S.A. 12A:2-316 to operate independently of N.J.S.A. 12A:2-719. J. White & R. Summers, Uniform Commercial Code (1972) § 12-12 at 395. See also Leff, “Unconscionability and the Code—The Emper- or’s New Clause,” 115 U.Pa.L.Rev. 485, 520 (1967). This implication is buttressed by N.J.S.A. 12A:2-316 UCC Comment 2, which states:
* ** * This Article treats the limitation or avoidance of consequential damages as a matter of limiting remedies for breach, separate from the matter of creation of liability under a warranty. If no warranty exists, there is of course no problem of limiting remedies for breach of warranty.

If sellers find that the resulting increase in sales because of such a guarantee generates greater net revenue than is needed to insure against the concomitant personal liability, then they may continue to offer to repair or replace nondefective products. See Note, supra, 50 N.Y.U.L.Rev. at 176. The *349more likely outcome, however, is that the price of the product to the consumer must be raised to compensate for the cost of insurance against Collins-type liability. Thus the consumer will have to pay extra for protection against nondefective product failure whether he feels this is desirable or not. It should be noted that this is an area where the consumer is able to protect his interest by purchasing insurance, thus making his own choice as to whether added protection against the consequences of nondefective product failures is desirable to him.