Colorado § 4-2-719 - Contractual modification or limitation of remedy.

§ 4-2-719. Contractual modification or limitation of remedy.

(1) Subject to the provisions of subsections (2) and (3) of this section and of section 4-2-718 on liquidation and limitation of damages:

(a) The agreement may provide for remedies in addition to or in substitution for those provided in this article and may limit or alter the measure of damages recoverable under this article, as by limiting the buyer's remedies to return of the goods and repayment of the price or to repair and replacement of nonconforming goods or parts; and

(b) Resort to a remedy as provided is optional unless the remedy is expressly agreed to be exclusive, in which case, it is the sole remedy.

(2) Where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in this title.

(3) Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable. Limitation of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable, but limitation of damages where the loss is commercial is not.

Source: L. 65: p. 1342, § 1. C.R.S. 1963: § 155-2-719.

ANNOTATION

Law reviews. For article, "Exclusion and Modification of Warranty under the U.C.C. — How to Succeed in Business Without Being Liable for Not Really Trying", see 46 Den. L.J. 579 (1969).

Issues of fact must be determined before the applicability of the doctrines of failure of essential purpose and unconscionability can be ruled upon. Wenner Petro. v. Mitsui & Co., 748 P.2d 356 (Colo. App. 1987).

Whether failure of essential purpose doctrine applies requires a two-tiered evaluation: (1) Identification of the essential purpose of the limited remedy; and (2) whether the remedy in fact failed to accomplish such purpose. Cooley v. Big Horn Harvestore Sys., 813 P.2d 736 (Colo. 1991).

A remedy fails of its essential purpose if it operates to deprive a party of the substantial value of the contract. Cooley v. Big Horn Harvestore Sys., 813 P.2d 736 (Colo. 1991); Curragh Queensland Mining v. Dresser Indus., 55 P.3d 235 (Colo. App. 2002).

When the seller cannot cure the defects by repeated attempts to repair, a limitation of remedy to repair fails of its essential purpose and the buyer is then free to revoke acceptance of the goods. Rose v. Colo. Factory Homes, 10 P.3d 680 (Colo. App. 2000).

Consequential damages are available as a remedy under subsection (2) where contract remedy of replacement or repair of defective parts failed of its essential purpose. Such damages are available despite fact that parties' contract contained a provision which excluded remedy of consequential damages resulting from liability. Cooley v. Big Horn Harvestore Sys., 813 P.2d 736 (Colo. 1991).

The parties to a contract may vary the provisions of the Uniform Commercial Code by agreement, and may provide for remedies in addition to or in substitution for those provided by the Uniform Commercial Code. Colo. Interstate Gas Co. v. Chemco, Inc., 854 P.2d 1232 (Colo. 1993).

Parties may enter into an agreement that the remedy of consequential damages shall not be available in the event the remedy of a suit for breach of a limited warranty to repair or replace fails of its essential purpose; however, such agreement must be expressly stated in clear and unambiguous language. Cooley v. Big Horn Harvestore Sys., 813 P.2d 736 (Colo. 1991).

When a purchase agreement establishing that the only warranty provided is a warranty to repair or replace defective parts contains no separate provision unambiguously recording the intent of parties to prohibit a buyer's recovery of consequential damages even when such sole remedy fails of its essential purpose, the buyer is entitled to the statutory remedy of consequential damages notwithstanding a general contractual disclaimer to the contrary. Cooley v. Big Horn Harvestore Sys., 813 P.2d 736 (Colo. 1991).

Applied in Leprino v. Intermountain Brick Co., 759 P.2d 835 (Colo. App. 1988); Molina v. Ford Motor Co., 441 F. Supp. 3d 1176 (D. Colo. 2020).