Moscatiello v. Pittsburgh Contractors Equipment Co.
595 A.2d 1190, 407 Pa. Super. 363, 16 U.C.C. Rep. Serv. 2d (West) 71 (1991)
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Rule of Law:
Under the Uniform Commercial Code (UCC), a warranty disclaimer is ineffective if it is not conspicuous, and a limitation on consequential damages is unconscionable and unenforceable if it is physically inconspicuous and there is a significant disparity in bargaining power and sophistication between the parties.
Facts:
- Moscatiello Construction Company ('Moscatiello'), owned by Franco Moscatiello, was awarded a contract by the Pennsylvania Department of Transportation ('PennDot') to reconstruct a road, requiring a specific type of paving machine.
- Moscatiello and his superintendent met with a vice president of Pittsburgh Contractors Equipment Company ('PCEC') to purchase a paver, and PCEC was aware of Moscatiello's specific PennDot contract requirements.
- On May 19, 1987, Moscatiello's superintendent executed a standard PCEC purchase agreement for a Curbmaster paver for $85,125.42.
- The reverse side of the contract contained clauses in extremely small print disclaiming all implied warranties and limiting the buyer's remedies to a return of the purchase price, while excluding all consequential and incidental damages.
- PCEC representatives did not direct Moscatiello's attention to these clauses, and Moscatiello had no prior business dealings with PCEC.
- The paver was delivered on June 15, 1987, and from its first use, it consistently failed to lay concrete evenly, producing a result unacceptable to PennDot.
- Over the next five months, Moscatiello made numerous complaints, and both PCEC and the manufacturer, Curbmaster, made multiple unsuccessful attempts to repair the machine.
- As a direct result of the paver's failure to function, Moscatiello incurred significant additional labor costs to produce a product acceptable to PennDot, and the machine was ultimately returned in December 1987.
Procedural Posture:
- Moscatiello filed a complaint against PCEC in the Allegheny County Court of Common Pleas (the trial court), asserting claims for breach of contract and breach of implied warranties.
- PCEC joined the paver's manufacturer, Curbmaster, Inc., as an additional defendant.
- Following a non-jury bench trial, the trial court entered a verdict in favor of Moscatiello and against PCEC and Curbmaster jointly for $146,811.43 in damages plus interest.
- Both PCEC and Curbmaster filed post-trial motions seeking relief from the verdict.
- The trial court denied Curbmaster's motions and granted PCEC's motion in part, allowing PCEC indemnification from Curbmaster, but denied all other relief sought by PCEC.
- PCEC, as appellant, filed an appeal to the Superior Court of Pennsylvania from the trial court's order denying its post-trial motions.
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Issue:
Under the Uniform Commercial Code, is a warranty disclaimer and limitation of remedies clause, printed in extremely small type on the reverse side of a standard form contract, enforceable against a buyer who was not made aware of the clauses and lacks the business sophistication of the seller?
Opinions:
Majority - Hester, Judge
No. A warranty disclaimer is ineffective unless it is conspicuous, and a limitation of remedies clause is unenforceable if it is unconscionable. The court found PCEC’s warranty disclaimer was inconspicuous because it was located on the reverse side of the contract in extremely small print, approximately one-fourth the size of the type on the front, rendering it ineffective under UCC § 2-316. The reference on the front to the reverse-side terms was also buried and did not adequately call attention to the significant rights being waived. Furthermore, the court held that the limitation of consequential damages was unconscionable under UCC § 2-719 and § 2-302. The court applied a test for unconscionability focusing on the absence of meaningful choice and terms unreasonably favorable to one party. It found Moscatiello, who was not a sophisticated merchant in heavy equipment, had no meaningful choice regarding the inconspicuous boilerplate provisions, while PCEC, an experienced dealer, held a superior bargaining position. This disparity, combined with the physically inconspicuous nature of the clauses, created unfair surprise and an abnormal allocation of risk, making the limitation of remedies unenforceable.
Analysis:
This decision reinforces the UCC's protective functions, demonstrating that courts will void critical contract terms hidden in fine print, especially in transactions between parties of unequal sophistication and bargaining power. It clarifies that even in a commercial context, if one party is functionally a consumer regarding the specific goods, boilerplate provisions disclaiming warranties or limiting remedies must be truly conspicuous to be enforceable. The case establishes a strong precedent for looking beyond the mere existence of contract language to the procedural fairness of its inclusion, preventing sellers from using standard forms to create unfair surprise and shift significant economic risks to unwary buyers.
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