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Myrtle Beach Pipeline Corp. v. Emerson Elec. Co. - 843 F. Supp. 1027 (D.S.C. 1993)

Rule:

The limited remedy of repair or replacement fails of its essential purpose if the seller will not or cannot repair or replace the defective product with a conforming product or there is unreasonable delay in repair or replacement. Typically, a limited repair/replacement remedy fails of its essential purpose where the seller is unsuccessful in repairing or replacing the defective part, regardless of good or bad faith or there is unreasonable delay in repairing or replacing defective components

Facts:

This action is before the court on the parties' cross-motions for partial summary judgment pursuant to Rule 56(c) of the Federal Rules of Civil Procedure. In their second amended complaint, Plaintiffs, a conglomeration of corporations and their insurers, (collectively, Myrtle Beach), assert claims of common law negligence and breach of implied warranty of merchantability pursuant to the Uniform Commercial Code as adopted in South Carolina, against Defendant Emerson Electric Company (Emerson), contending that Emerson is liable to Myrtle Beach for damages resulting from injury to property owned by the United States. Conversely, Emerson asserts that Myrtle Beach cannot proceed on its common law negligence claim because this action is grounded solely in contract and therefore Myrtle Beach is relegated to the limited remedies embodied in the contract between the parties.

Issue:

Is Myrtle Beach relegated to the limited remedies embodied in the contract with Emerson?

Answer:

Yes

Conclusion:

Myrtle Beach’s tort claim was dismissed and the court granted partial summary judgment to Emerson where both parties were merchants who executed a contract and bargained for a particular product. The court also held that Emerson’s disclaimer of the warrant of merchantability was not ambiguous and Myrtle Beach could not seek remedies other than repair or replacement where the contractual language limited the remedies. Limited repair or replacement remedy did not fail its essential purpose and exclusion of consequential damages was not unconscionable where sophisticated parties to a commercial transaction had negotiated a contract and the product injured only itself and not other property. The Uniform Commercial Code and not tort law provided the exclusive rights and remedies.

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