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its essential purpose if, due to the circumstances, it deprives the aggrieved party of the essential benefit of its bargain. For instance, a remedy limited to repair, replacement, or refund may fail of its essential purpose as to damages arising from late delivery, as opposed to defective goods. Here, the exclusive or limited remedy will not apply, and the parties may resort to the full spectrum of remedies in Article 2, regardless of any contractual limitation or modification. There seems to be some conceptual overlap between failure of a remedy’s essential purpose and the distinct doctrine of unconscionability. [U.C.C. § 2-719(2) (1951); Viking Yacht Co. v. Composite One LLC , 385 Fed.Appx. 195 (3d Cir. 2010); 2 Hawkland UCC Series § 2-719:3, Westlaw (database updated June 2021).] Note : In determining whether a limited or exclusive remedy fails of its essential purpose, the focus is on whether the aggrieved party (usually, the buyer) receives the benefit of its bargain. The focus should not rest on whether that party is generously or sparsely compensated. [2 Hawkland UCC Series § 2-719:3, Westlaw (database updated June 2021).] a. Limitation to Repair or Replacement of Defective Goods or Parts as Failing of Its Essential Purpose A quite common remedy limitation is (1) excluding incidental or consequential damages and (2) confining the buyer’s remedies to repair or replacement of defective goods or parts, perhaps with a refund of any purchase price paid. Provided the buyer has the use of substantially conforming or defect-free goods, such a remedy will generally pass muster. But this limited remedy may fail of its essential purpose if (1) the defect is latent and cannot be discovered on reasonable inspection, especially if the goods are irreversibly incorporated into other goods; (2) the seller cannot or does not repair or replace the goods within a reasonable time; or (3) a defective component causes destruction of the entire completed good. This observation holds especially apt if the buyer’s true incidental or consequential damages are wildly disproportionate to the limited remedy. [ See Viking Yacht Co. v. Composite One LLC , 385 Fed.Appx. 195 (3d Cir. 2010).] b. Failure of Essential Purpose and Unforeseen Circumstances Generally, the circumstances leading to failure of a limited remedy’s essential purpose should be unforeseeable to the parties at the time of contracting. [ See Viking Yacht Co. v. Composite One LLC , 385 Fed.Appx. 195 (3d Cir. 2010).] Example : A yacht manufacturer contracted to buy gel coating from a dealer for $3,000. Gel coating was applied to serve as a cosmetic finish and to protect the yacht from damage. The contract (1) limited the manufacturer’s remedies to replacement of the gel coat or refund of the purchase price and (2) expressly precluded other remedies, including incidental and
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