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Kearney & Trecker Corp. v. Master Engraving Co.

Decided: June 27, 1986.

KEARNEY & TRECKER CORPORATION, PLAINTIFF-APPELLANT,
v.
MASTER ENGRAVING CO., INC., DEFENDANT-RESPONDENT



On appeal from Superior Court of New Jersey, Law Division, Bergen County.

Pressler, Dreier and Gruccio. The opinion of the court was delivered by Dreier, J.A.D.

Dreier

[211 NJSuper Page 378] This is an appeal by plaintiff, Kearney & Trecker Corporation (Kearney), the manufacturer and seller of the Milwaukee-Matic 180 tooling machine (MM180). Kearney sold the MM180 to defendant, Master Engraving Inc. Company (Master), for approximately $167,000. The seller contests a jury verdict on Master's counterclaim finding Kearney in breach of contract and awarding $57,000 damages to which the court added $14,873.78 in prejudgment interest. Kearney defended on the basis

of contractual provisions limiting the buyer's remedy to repair or replacement of the machine and excluding consequential damages. Since we find these limitations mutually dependent and the limited remedy of repair or replacement failed of its essential purpose, we do not disturb the award.*fn1

At issue is the reconciliation of two "boilerplate" provisions limiting remedies and damages set forth both in a written proposal and in an acceptance form. The provisions appeared after the seller's express warranty that the machine will:

and a disclaimer that the "WARRANTY EXPRESSED HEREIN IS IN LIEU OF ANY OTHER WARRANTIES, EXPRESS OR IMPLIED." The brochure describing the machine contained additional representations, discussed infra.

One of the provisions under review limits the buyer's remedy to "REPAIR OR REPLACEMENT OF THE DEFECTIVE PART OR PRODUCT, OR AT SELLER'S OPTION, RETURN OF THE PRODUCT." The other states "UNDER NO CIRCUMSTANCES WILL SELLER BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES OR FOR ANY OTHER LOSS, DAMAGE OR EXPENSE OF ANY KIND, INCLUDING LOSS OF PROFITS."

After hearing testimony of Master's revenue loss occasioned by the repeated malfunctioning of the machine beginning on the date of its initial use and of Kearney's unsuccessful attempts to repair the machine, the jury returned a verdict sheet containing what at first appear to be inconsistent answers. It found that Kearney was in breach of contract but that Kearney did not sell a defectively designed or manufactured product. We read this

response, in light of the charge given,*fn2 to mean that the jury believed that the limited remedy failed of its essential purpose. N.J.S.A. 12A:2-719(2).

Under appropriate circumstances the designation of a sole remedy, N.J.S.A. 12A:2-791(1)(b), or the exclusion of consequential damages, N.J.S.A. 12A:2-791(3), will be enforced. Gladden v. Cadillac Motor Car Division, General Motors Corp., 83 N.J. 320, 330 (1980); Monsanto Company v. Alden Leeds, Inc., 130 N.J. Super. 245, 260 (Law Div.1974). But "[w]here circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided (under the U.C.C.)." N.J.S.A. 12A:2-719(2). Cf. Ventura v. Ford Motor Corp., 180 N.J. Super. 45, 65-66 (App.Div.1981), providing for a "rescission-type remedy" where revocation of acceptance was justified.

Plaintiff relies upon Chatlos Systems v. National Cash Register Corp., 635 F.2d 1081, 1086 (3d Cir.1980) for the proposition that a judicial rejection of the limitations of remedy has no effect upon ...


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