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clear to the purchaser that the seller made a practice of disclaiming implied warranties. In order for a court to find there was an established course of dealings, it must be based on evidence that there were (1) numerous similar transactions, (2) between the parties, and (3) that are recent.
Lines of fairness
Another factor used in determining the validity of a limitation of liability is an extremely unfair limitation. For example, a clause limiting liability of consequential damages for personal injury in a case of consumer goods is, on its face, unconscionable. On the other hand, a limitation of damages for commercial loss is not shockingly unfair or unreasonable.
Conclusion
Including limitations of liability for warranties of merchantability in your contracts may prevent you from being caught in the middle of a manufacturer's limited warranty and your client's claims. Keep in mind, in order to be valid limitations of liability on warranties of merchantability, the clause must be conspicuous and cannot be unconscionable under the circumstances. Also, the course of performance or dealing with the other party to the contract is a factor that may be considered. Therefore, it is not only important what you put in writing, but also your actions that will play a role in determining the validity of a contractual limitation of liability. IMAS
Alison R. Mullins, Esq., is an associate of the Virginia law firm Hughes & Associates, PLLC, www.hughesnassociates.com. She may be reached at alison@hughesnassociates.com or by calling at 703-671-8200.
This article is not intended to provide specific legal advice, but instead as general commentary regarding legal matters. You should consult with an attorney regarding your legal issues as the advice you may receive will depend upon your facts and the laws of your jurisdiction.
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