Goddard v. General Motors Corp.
60 Ohio St. 2d 41 (1979)
Rule of Law:
When an exclusive or limited remedy, such as the repair and replacement of defective parts, fails of its essential purpose, a separate clause in the warranty disclaiming consequential damages is also rendered ineffective, allowing the buyer to recover all remedies available under the Uniform Commercial Code.
Facts:
- A retail purchaser bought a 1973 Vega automobile from General Motors.
- General Motors provided an express warranty promising to repair any defective or malfunctioning part for a period of 12 months or 12,000 miles.
- The same warranty included a provision stating that General Motors would not be liable for consequential damages, such as loss of time, inconvenience, or loss of use of the vehicle.
- The new car was so riddled with defects that General Motors was unable to fulfill its obligation to effectively repair the vehicle under the warranty.
Procedural Posture:
- The retail purchaser (appellant) filed a lawsuit against General Motors (appellee) in a trial court for breach of warranty.
- The case was appealed to the Court of Appeals, an intermediate appellate court.
- The Court of Appeals held that the warranty's limitation of consequential damages was effective and barred the purchaser's claim for such damages.
- The purchaser, as appellant, appealed that part of the decision to the state's highest court.
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Issue:
Does a seller's failure to effectively repair a product under a limited 'repair and replace' warranty, causing the remedy to fail of its essential purpose, also invalidate a separate contractual provision that excludes the buyer's recovery of consequential damages?
Opinions:
Majority - Herbert, J.
Yes. When a seller's limited remedy of repair and replacement fails of its essential purpose, the buyer may recover consequential damages notwithstanding a separate clause in the contract excluding them. The court reasoned that under R.C. 1302.93(B) (UCC § 2-719(2)), the failure of an exclusive remedy's essential purpose allows the buyer to access all general remedy provisions of the Code. The court rejected the argument that the consequential damage disclaimer is an independent provision that stands unless unconscionable. Instead, it held that the limitation of remedy and the disclaimer of liability are not separable from the obligations of the warranty. When the seller repudiates its obligation to repair, it cannot simultaneously claim the benefits of its stated limited liability, as doing so would deprive the buyer of the substantial value of the bargain.
Analysis:
This decision clarifies that under the UCC, a clause limiting remedies to 'repair and replacement' and a clause excluding consequential damages are interdependent. When a seller fails to uphold its repair obligation, causing the limited remedy to fail its essential purpose, it forfeits the protection of the consequential damages waiver. This prevents a seller from leaving a buyer with a defective product and no meaningful recourse for foreseeable losses caused by the product's failure. The ruling significantly strengthens consumer protection in breach of warranty cases, especially in 'lemon' law scenarios where a product has recurring, unfixable defects.
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