Razor v. Hyundai Motor Am., 222 Ill. 2d 75

854 N.E.2d 607 (2006) · Supreme Court of Illinois · June 29, 2006 · No. 98813

Summary

The Illinois Supreme Court considers whether a contractual exclusion of incidental and consequential damages remains enforceable when a limited warranty remedy has failed of its essential purpose. The court adopts the independent approach, holding that the consequential-damages exclusion must be evaluated separately for unconscionability, and also addresses the sufficiency of evidence supporting the warranty-damages award. The court affirms in part, reverses in part, and remands.

Holdings

  1. Under Illinois Uniform Commercial Code section 2-719, a limitation of remedy and an exclusion of consequential damages are independent provisions. The failure of the limited remedy to serve its essential purpose does not automatically invalidate the consequential-damages exclusion; the exclusion must independently be enforced unless unconscionable.
  2. Hyundai's consequential-damages exclusion was unconscionable and unenforceable because the record showed that the warranty and exclusion were not conveyed to Razor at or before the time of sale.
  3. The evidence was insufficient to support the jury's $5,000 warranty-damages award because the plaintiff presented no reasonable basis for calculating the vehicle's diminished value.
  4. The circuit court erred by preemptively preventing Razor from attempting to establish a foundation for her opinion regarding the vehicle's value and diminished value.

Questions Presented

  1. Whether a contractual exclusion of consequential damages remains enforceable when a limited contractual remedy fails of its essential purpose.
  2. Whether Hyundai's exclusion of consequential damages was unconscionable under Illinois law.
  3. Whether sufficient evidence supported the jury's $5,000 warranty-damages award.
  4. Whether the circuit court improperly barred the plaintiff from laying a foundation for her opinion regarding the vehicle's diminished value.
  5. Whether the partial reversal required reversal of the attorney-fee award.

Disposition

reversed_and_remanded

Cases Cited (27)

  • Sorce v. Naperville Jeep Eagle, 309 Ill. App. 3d 313 (1999)(followed)
  • Lara v. Hyundai Motor America, 331 Ill. App. 3d 53 (2002)(disapproved in part)
  • Adams v. J.I. Case Co., 125 Ill. App. 2d 388 (1970)(disapproved in part)
  • Jones & McKnight Corp. v. Birdsboro Corp., 320 F. Supp. 39 (N.D. Ill. 1970)(distinguished)
  • Givan v. Mack Truck, Inc., 569 S.W.2d 243 (Mo. App. 1978)(discussed)
  • Pierce v. Catalina Yachts, 2 P.3d 618 (Alaska 2000)(followed in part)
  • Bishop Logging Co. v. John Deere Industrial Equipment Co., 317 S.C. 520, 455 S.E.2d 183 (1995)(discussed)
  • Chatlos Systems v. National Cash Register Corp., 635 F.2d 1081 (3d Cir. 1980)(followed)
  • AES Technology Systems, Inc. v. Coherent Radiation, 583 F.2d 933 (7th Cir. 1978)(rejected in part)
  • Smith v. Navistar International Transportation Corp., 957 F.2d 1439 (7th Cir. 1992)(criticized)

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