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Razor v. Hyundai Motor Am. - 222 Ill. 2d 75, 305 Ill. Dec. 15, 854 N.E.2d 607 (2006)

Rule:

Contractual limitations or exclusions of consequential damages will be upheld unless to do so would be unconscionable, regardless of whether the contract also contains a limited remedy which fails of its essential purpose.

Facts:

Plaintiff Razor bought a new car from the car dealer. The purchase came with a written five-year, 60,000 mile warranty. A warranty provision stated that incidental or consequential damages were not covered. Razor soon started experiencing difficulties with the vehicle because it would start some times and not other times. The problem was not fixed even after numerous attempts were made to fix it. Razor sued defendant Hyundai Motor Co., the car manufacturer, pursuant to the Magnuson-Moss Warranty Act, 15 U.S.C.S. §§ 2301 et seq., and the Illinois Uniform Commercial Code, 5 Ill. Comp. Stat. Ann. §§ 1-101 et seq. After a jury trial, the jury returned a verdict for Razor, and awarded consequential damages to her for aggravation, inconvenience, and loss of use, and breach of warranty damages for the car's diminished value. The trial court entered judgment accordingly, which the appellate court affirmed. Defendant Hyundai appealed.

Issue:

Did the circuit court act properly in refusing to enforce a contractual clause prohibiting the award of consequential damages?

Answer:

Yes

Conclusion:

The state supreme court found the limitations provision in the warranty was unenforceable because it was unconscionable, which meant consequential damages were properly awarded, but that breach of warranty damages had not been proven by competent evidence.

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