Also known as: fail of its essential purpose · failing of its essential purpose · failed of its essential purpose · remedy fails of its essential purpose
Written by attorneys · grounded in primary & secondary sources — see below
A circumstance in which an exclusive or limited contractual remedy does not provide the buyer with the substantial value of the bargain. The buyer may then pursue the full range of remedies otherwise available under the UCC.
CityCare Hospital purchased a surgical robot from Meditech under a contract that limited remedies to repair or replacement. The robot malfunctioned repeatedly during operations, and Meditech's multiple repair efforts over several months left the equipment unreliable. Because the limited remedy never delivered a functioning machine, CityCare may recover full breach-of-warranty damages.
Bishop Logging bought specialized swamp equipment from John Deere under a contract limiting remedies to repair. After repeated unsuccessful repair attempts the equipment still could not operate in the intended conditions. The limited remedy therefore failed of its essential purpose, allowing Bishop Logging to pursue other UCC remedies for the nonconforming goods.
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A repair-or-replacement remedy fails of its essential purpose when repeated repair attempts do not produce conforming goods within a reasonable time. The buyer then regains access to all UCC remedies.
Supporting sources
No. Failure of essential purpose is a distinct inquiry from unconscionability. A conscionable repair clause still fails of its essential purpose if the seller cannot cure the defect after a reasonable opportunity.
Supporting sources
The UCC requires that every sales contract provide at least a minimum adequate remedy. When an agreed limitation leaves the buyer without the substantial value of the bargain, the limitation yields to the general remedial provisions.
Supporting sources
…agreed to be exclusive, in which case it is the sole remedy. (2) Where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in this Act. (3) Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable. Limitation of consequential damages…