Martin Silver is a practicing attorney with offices in Hauppauge, N.Y. He was a flooring installer before and during the time he went to law school and has since represented numerous industry people and companies. To contact him, call 631-435-0700.
Within the law
There is a section of the Uniform Commercial Code (UCC) that allows a seller of goods to limit his obligation to the buyer, in the event that the goods delivered are defective or otherwise not as agreed, to the repair or replacement of those goods.
Under this section then, a seller is allowed to write into the sales agreement a clause limiting the rights of a buyer in the event of a problem. This limitation actually is in two separate parts.
The first thing this section does is allow a seller to deprive a buyer of the right to obtain consequential and/or incidental damages he may suffer as a result of the seller. One example of this might be an adhesive manufacturer's warranty that says if in the event the adhesive is defective he is not responsible for any damages other than replacement of the adhesive. This means any goods that must be replaced, and the labor to do it, aside from the adhesive itself, becomes the problem of the buyer.
Other parts of the code, however, say it should operate to put the "aggrieved party" in the same position as if the other party had done the right thing, and still other parts say there is always an obligation of good faith and that no unconscionable terms will be enforced.
Who said it was simple?
This brings to mind a case I saw in which the "father of the bride" sued a photo developing company for losing all his pictures of the wedding. The company maintained that, as the receipt clearly stated, if the film was lost or damaged its only responsibility was to give him a new roll of film. He, on the other hand, claimed he was entitled to redo the wedding, cater it and fly in the out of town relatives, all at the film processors cost just so he could re-take the pictures. I never did find out who won.
In any event, getting back to this one particular section, besides allowing the seller to completely eliminate incidental or consequential damages, it also permits the seller to limit his obligations to the buyer.
Such a clause might say, "In the event of a default, the seller shall have the sole right to choose to: 1) take back the goods and return the price paid, 2) repair the claimed defects, or 3) replace the claimed defective goods, the selection of the seller shall be at his sole digression and shall be the only remedy to which the buyer is entitled."
In one case, the dealer did not have a "limitation of damage" clause in his printed sales form. Instead he had posted signs throughout the store stating, "Merchandise may be exchanged for store credit only. No cash refunds."
In that case the judge found, although this expressed store policy was binding upon the customer, it applied only to merchandise being exchanged simply because the customer was not happy with it and not because of any claimed defects. Since the case concerned goods that were being returned because they were claimed to be defective, they were not covered by the notice.
If this dealer, in addition to the store notice, had printed the above "limitation of damage" clause on his order form, he would have gotten the result that he wanted. He would not have been forced to return the purchase price but instead would have been able to satisfy his obligation by means of a repair, and if that could not be done, a replacement or store credit.
As we do so often, we must again remind you, with regard to sales to consumers, there may very well be local consumer protection laws that supercede the UCC. Try to make yourself aware of them.