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consequential damages. The manufacturer paid for the gel and applied it to several yachts. Soon after, the gel coat on each ship cracked, due to which the yachts suffered extensive damage. Repairing the yachts cost the manufacturer over $800,000 per ship . On similar facts, the Third Circuit held that the limited remedy failed of its essential purpose. The limited damages amount—refund of the $3,000 purchase price—was unconscionably low, considering the repair costs. Further, the defect in the gel was undiscoverable until the gel finally cracked. [ Adapted from Viking Yacht Co. v. Composite One LLC , 385 Fed.Appx. 195 (3d Cir. 2010).] 5. Limiting or Excluding Consequential Damages The agreement may generally limit or exclude consequential damages. This limitation or exclusion will be ineffective, however, if it is unconscionable. In cases of consumer goods ( i.e. , goods purchased primarily for personal, family, or household use), any limitation of consequential damages for personal injury is prima facie unconscionable. Thus, here, the seller bears the burden to prove that the limitation of consequential damages is not unconscionable, lest the limitation be held unenforceable. Limitation of damages for commercial loss, however, is not prima facie unconscionable. [U.C.C. § 2-719(3) (1951); Horn v. Boston Scientific Neruomodulation Corp. , No. CV409–074, 2011 WL 3893812 (S.D. Ga. Aug. 26, 2011); Unconscionability, supra .] Note : Section 2-719(3) expressly states that limitation or exclusion of consequential damages is ineffective if unconscionable. It does not expressly impose the same stricture on other limitations or exclusions of remedies. Even so, considering Article 2 as a whole, any limitation or exclusion of remedies in the agreement is unenforceable if it is unconscionable, regardless whether it concerns consequential damages. Insofar as the limitation or exclusion is unconscionable, Article 2’s general remedies will apply as though the limitation or exclusion never existed. [U.C.C. § 2-719, cmt. 1 (1951).] Example : A manufacturer sold spinal cord implants to assist those recovering from spinal cord injuries. A patient had one of the implants placed in his back. Sometime later, the implant malfunctioned, causing severe and uncontrollable spasms that physically injured the patient. The relevant contract purported to limit the patient’s remedies to repair, replacement, or refund and to eliminate consequential damages altogether. Here, the limitation is prima facie unconscionable, insofar as it would preclude the patient from recovering consequential damages for his physical injuries. Thus, the manufacturer must prove that the limitation is, in fact, not unconscionable. [ See Horn v. Boston Scientific Neruomodulation Corp. , No. CV409–074, 2011 WL 3893812 (S.D. Ga. Aug. 26, 2011).]
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