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A & M Produce Co. v. FMC Corp.

California Court of Appeal
186 Cal. Rptr. 114 (1982)


Facts

Alex Abatti, a farmer, owned A & M Produce Co. (A & M) (plaintiff). In 1973, Abatti decided to grow tomatoes for the first time. Tomatoes are harvested using equipment that Abatti had never used. Abatti got one bid for this equipment plus a hydrocooler. Abatti then spoke with FMC Corp. (FMC) (defendant). FMC said that Abatti would not need a hydrocooler with FMC’s equipment, which cost less than the other bid. Abatti agreed to buy FMC’s equipment and signed FMC’s field-order form, which was a standard double-sided form setting out the purchase agreement’s terms. On the back of the form was a paragraph titled “Warranty” that, in bold print, disclaimed all warranties. The back of the form also had a paragraph titled “Disclaimer of Consequential Damages” that stated that FMC would not be liable for any consequential damages. Consequential damages result from the secondary effects of a contract breach. A & M began harvesting tomatoes with FMC’s equipment. The equipment did not sort the tomatoes quickly enough, causing the tomatoes to pile up and get damaged. The absence of a hydrocooler also caused the damaged tomatoes to develop fungus. A & M contacted FMC asking to return the equipment in exchange for a refund. FMC refused and told A & M to pay the balance of the price. A & M sued FMC for breach of express and implied warranties. The trial judge ruled that the clauses disclaiming all warranties and disclaiming consequential damages were unconscionable under the circumstances. Therefore, the jury did not see the back of the contract where the disclaimers were located and awarded A & M nearly $300,000 in damages. FMC appealed.

Rule of Law

Issue

Holding and Reasoning (Wiener, J.)

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