While consequential damages are generally permissible under the Iowa Code Ann. § 554.2714, so too are they subject to limitation. Accordingly, plaintiff cannot recover consequential or incidental damages unless the limitation is unconscionable. Iowa Code Ann. § 554.2719(3).
A battle of the forms ensued after the buyer took delivery of machinery which did not function as the sellers represented that it would. When the sellers relied on a pre-printed limitation of warranties that restricted their damages to repair or replacement of defective parts, the buyer filed suit for breach of contract and other business-related torts. The parties filed cross-motions for summary judgment.
Was a summary judgment proper?
The court held that: (1) the circumstances showed that parties intended the three documents on which the sellers relied to be their final agreement as to the terms that the three writings contained and that the documents could not be contradicted by prior or contemporaneous agreements; (2) under Iowa Code Ann. § 554.2209(4), the parties' attempted modification operated as a waiver of terms in an allied paper that were favorable to the buyer; (3) under Iowa Code Ann. § 554.2719(3), the buyer's waiver of consequential and incidental damages was enforceable because the underlying clause was not unconscionable; and (4) under Delaware tort law, the buyer raised a genuine issue of material fact as to whether one of the sellers' representatives made production estimates on the machinery with falsity or reckless indifference.