Also known as: exclusive remedy · limited remedy · limitation of remedies · exclusive remedies clause
Written by attorneys — see sources below.
A contractual stipulation that confines a party's available remedies to specified forms, such as repair or replacement of goods. When circumstances cause the stipulated remedy to fail of its essential purpose, the aggrieved party may pursue remedies otherwise available under the governing law.
Eastern Electric sold hybrid seeds to Eric Espinoza under a contract that limited his remedy to replacement seed only. The delivered seeds failed to germinate due to a latent defect, producing total crop loss far exceeding the contract price. Because replacement could not restore the lost harvest, Eric may pursue damages under the UCC.
Eileen Epstein signed an employment agreement requiring arbitration of all claims and limiting her exclusive remedies to back wages only. After termination she sought statutory remedies including punitive damages and reinstatement. Because the wage cap prevented full vindication of statutory rights under the contract, the limitation was unenforceable.
Mary Armendariz and Dolores Olague-Rodgers were hired by Foundation Health Psychcare Services, Inc. in July and August of 1995 for positions in the Provider Relations Group and were later promoted to supervisory roles with annual salaries of $38,000. As a condition of their employment, the employees signed application forms and separate arbitration agreements that required binding arbitration of any dispute arising from termination of employment. The arbitration clause provided that the employees' exclusive remedies would be limited to back wages from the date of discharge until the arbitration award and expressly excluded other remedies such as reinstatement and injunctive relief. On June 20, 1996, the employees were informed that their positions were being eliminated and that they were terminated. During their employment, they alleged that supervisors and coworkers engaged in sexually based harassment and discrimination, and they claimed the termination occurred because of their perceived or actual sexual orientation. The employees filed a complaint against the employer and its parent company alleging a cause of action for violation of the FEHA as well as tort and contract claims for wrongful termination, seeking general damages, punitive damages, injunctive relief, and attorney fees and costs. The employer filed a motion to compel arbitration under Code of Civil Procedure section 1281.2, supported by declarations. The trial court denied the motion, concluding that the arbitration agreement was an adhesion contract containing provisions so one-sided as to shock the conscience, including the requirement that only employees arbitrate claims and the limitation of damages to backpay. The Court of Appeal reversed the trial court's order, holding that the damages provision was unconscionable but that the remainder of the agreement should be enforced after severance. The Supreme Court granted review of the case.
View caseEthan Evans sought to use his property in a manner barred by a municipal housing code. He bypassed the local administrative tribunal and filed directly in federal court. Because the code supplied an exclusive contractual administrative remedy that had not been pursued, his federal action was premature.
In early 1973, Mrs. Inez Moore received a notice of violation from the city of East Cleveland. The notice stated that her grandson John Moore, Jr., was an illegal occupant of her home. It directed her to comply with the housing ordinance. Mrs. Moore lived in her East Cleveland home together with her son Dale Moore, Sr., and her two grandsons Dale Moore, Jr., and John Moore, Jr. John came to live with her after his mother's death when he was less than one year old. When she failed to remove John from the home, the city filed a criminal charge against her. Mrs. Moore moved to dismiss the charge. She claimed that the ordinance was constitutionally invalid on its face. Her motion was overruled. Upon conviction she was sentenced to five days in jail and a $25 fine. The East Cleveland ordinance limited occupancy of a dwelling unit to members of a single family. The ordinance defined family to include only a husband or wife of the nominal head of the household, unmarried children of the head or spouse provided they have no children residing with them, a parent of the head or spouse, or not more than one dependent child of the head or spouse along with that child's spouse and dependent children. The Ohio Court of Appeals affirmed the conviction after giving full consideration to her constitutional claims. The Ohio Supreme Court denied review of the case. The United States Supreme Court noted probable jurisdiction of her appeal.
View caseA limited remedy fails when the stipulated relief cannot achieve its basic objective, such as when repeated repair attempts leave goods unusable. In that event the buyer regains access to all UCC remedies including damages.
Supporting sources
…administrative processes is mandated for a complex of reasons. Statutes sometimes provide administrative procedures as the exclusive remedy. Even apart from a statutory command, it is common sense to permit the simple, speedy, and inexpensive processes of the administrative machinery to sift the facts and compile a complete…