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6. Rule if the Agreement Both Limits Remedies and Excludes Incidental and Consequential Damages Oftentimes, an agreement will purport to both limit remedies ( e.g. , limiting the buyer’s remedies to repair, replacement, or refund) and exclude incidental and consequential damages. If the limited-remedies clause is deemed unenforceable for failing of its essential purpose, courts are divided over the effect on the damages exclusion. A minority holds that if the limited-remedies clause is unenforceable, then so is the damages exclusion. Most courts instead analyze the two clauses independently. Under this latter view, if the limited-remedies provision is unenforceable, the damages exclusion might be enforceable if it complies with the abovementioned rules. Here, the aggrieved party will have an Article 2 remedy that replaces the now unenforceable limited remedy ( e.g. , cover damages) but may still be precluded from incidental or consequential damages. [ See 2 Hawkland UCC Series § 2-719:3, Westlaw (database updated June 2021).] Statute of Limitations in Article 2 In general, a cause of action for breach of any contract of sale (that is, any contract subject to Article 2) must be brought within four years after the cause of action accrues. The parties may, by the original agreement, reduce this limitations period to not less than one year. The parties may not, however, extend the limitations period beyond four years. [U.C.C. § 2-725(1) (1951).] 1. When a Cause of Action Accrues in Article 2 Generally, the cause of action accrues when the breach occurs, regardless of whether or to what extent the nonbreaching party knows of the breach. For instance, the buyer’s breach for nonpayment generally occurs when payment is due. A breach of warranty normally occurs upon tender of delivery. The seller’s breach for failing to deliver the goods occurs when delivery is due. But a different rule applies if (1) a warranty expressly extends to the goods’ future performance, and (2) the breach is undiscoverable until the time of that future performance. Here, the cause of action accrues when the breach is discovered or should have been discovered. [U.C.C. § 2-725(2) (1951); 2 Hawkland UCC Series § 2-725:2, Westlaw (database updated June 2021).] a. Whether Warranty Expressly Extends to the Goods’ Future Performance Generally, the warranty expressly extends to the goods’ future performance if, per the agreement’s express provisions, the goods must meet a certain level of quality for some time after delivery. The courts are divided over whether the agreement must state a specific length of time. For example, the agreement may provide that the goods will be free of defects for six years from the date of sale. Courts are also divided over whether an express promise to repair the goods or remedy defects within some time after delivery amounts to an explicit warranty as to the goods’ future performance. Some authority holds
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