Question

In: Accounting

Which of the following is most likely to be ruled by a court to be an...

Which of the following is most likely to be ruled by a court to be an unconscionable remedy limitation under the UCC?

A.

A provision that limits consequential damages for personal injuries to consumers

B.

A provision that limits consequential damages for personal injuries to merchants

C.

A provision that limits consequential damages for personal injuries to corporations

D.

All of the above

Solutions

Expert Solution

It is shocking how much business keeps on being done between moderately complex business substances in light of an easygoing trade of structures, regardless of the possibly ruinous results for a purchaser of terms contained in a receipt or pressing slip sent by the dealer alongside the thing bought. Think about the accompanying situation: A motor repair office (the "purchaser") is employed to repair a $1 million race auto motor. The purchaser needs a $10,000 part to settle the motor. The part comprises of different cutting edges. On the off chance that any of the cutting edges severs while the motor is working, it is likely that the whole motor will be totally pulverized, in this manner conceivably subjecting the purchaser to $1 million in risk, in any event (expecting no extra harm to the race auto). The purchaser buys the essential part from the maker (the "vender") by faxing a buy arrange recognizing the part and the cost, without any terms concerning guarantees or cures upon a rupture of guarantee. The dealer sends the part to the purchaser alongside a receipt or pressing slip that puts forward, on the switch side, a progression of "terms and conditions," including arrangements barring the inferred guarantees of merchantability and wellness for a specific reason, constraining the purchaser's solutions for repair or substitution of the inadequate part, and barring weighty harms. Do these terms turn out to be a piece of the gatherings' agreement? On the off chance that the part comes up short and devastates the $1 million motor, is the purchaser restricted to recuperating the estimation of a $10,000 part from the dealer?

Here is the manner by which these inquiries would commonly be taken care of under Article 2 of the Uniform Commercial Code (the "U.C.C."), which applies to exchanges in merchandise and has been received in every one of the 50 expresses: The gatherings' "skirmish of the structures" is at first administered by § 2-207 of the U.C.C., which manages extra terms in acknowledgment or affirmation of an offer. The purchaser's buy request would be viewed as an offer, which was acknowledged when the vender dispatched the part. The extra terms in the vender's receipt barring guarantees and weighty harms and restricting the purchaser's solutions for repair or substitution would be "understood as proposition for expansion to the agreement." U.C.C. § 2-207(2). Between vendors, for example, the purchaser and the merchant, such terms consequently turn out to be a piece of their agreement unless "(a) the offer explicitly confines acknowledgment to the terms of the offer; (b) they tangibly change it; or (c) notice of complaint to them has just been given or is given inside a sensible time after notice of them is gotten." Id. In this situation, the purchaser's buy arrange did not explicitly restrict acknowledgment to the terms of the offer, nor did the purchaser question the terms put forward on the back of the merchant's receipt. Truth be told, as most buyers, the purchaser presumably did not in any case take a gander at the terms until the point that the part fizzled, the motor was decimated, and the race auto's proprietor looked to the purchaser to recoup $1 million in harms. Appropriately, the terms on the merchant's receipt turned out to be a piece of the agreement unless they "physically alter[ed] it."

The U.C.C. particularly gives "[e]xamples of run of the mill statements which ordinarily 'physically modify' the agreement thus result in amazement or hardship if consolidated without express mindfulness by the other party," including "a provision discrediting such standard guarantees as that of merchantability or wellness for a specific reason in conditions in which either guarantee typically appends." Id. § 2-207 cmt. 4. Thusly, the vender's endeavor to bar the suggested guarantees of merchantability and wellness for a specific object was likely unsuccessful. It couldn't be any more obvious, e.g., Distinctive Cabinetr

The answer is all of the above


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