Paul BILLINGS
v.
JOSEPH HARRIS COMPANY, INC.
No. 50.
Supreme Court of North Carolina.
July 14, 1976.*323 McElwee, Hall & McElwee by John E. Hall, North Wilkesboro, and Arnold L. Young, Sparta, for plaintiff.
Hudson, Petree, Stockton, Stockton & Robinson by Norwood Robinson, George L. *324 Little, Jr., and Steven E. Philo, Winston Salem, for defendant.
LAKE, Justice.
The plaintiff relies upon our decision in Gore v. Ball, Inc., 279 N.C. 192, 182 S.E.2d 389 (1971). That case is distinguishable from the present case for two reasons. First, there the defendant delivered the wrong kind of seed, whereas, in the present case, the plaintiff admits that he received the exact kind of seed he ordered. Thus, in the present case, there was no violation of the North Carolina Seed Law through false labeling of seed. In the Gore case, we held that a provision in the contract limiting the seller's liability for delivering falsely labeled seed to the purchase price of the seed was contrary to the public policy of this State as declared in the North Carolina Seed Law and was, therefore, invalid. That question is not involved in the present litigation. Second, as we expressly stated in the Gore case, the transaction there having occurred prior to the effective date of the Uniform Commercial Code in North Carolina, the provisions of that Act were not applicable to the Gore case. GS XX-XX-XXX. Here the purchase of seed out of which the present litigation arose occurred after the Uniform Commercial Code took effect in this State. Thus the provisions of the Code do apply to this case.
The disclaimer of warranty clause, with which we are presently concerned, provides expressly that the seller makes no warranty of merchantability and no warranty of fitness for purpose and no other warranty except a warranty that the seed conform to the label descriptions required by Federal and State Seed Laws. Thus, it excludes any warranty against the presence in the seed of a disease.
The printed order blank further provides that the seller's liability for breach of any warranty (i. e., warranty of conformity to the label description) is limited to the return of the purchase price. This latter provision is the one which we held contrary to the public policy of the State as declared in the North Carolina Seed Law in Gore v. Ball, Inc., supra. It is not involved in this action.
The Uniform Commercial Code, which took effect in this State on 30 June 1967, provides in G.S. 25-2-316:
"Exclusion or modification of warranties.(1) Words or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit warranty shall be construed wherever reasonable as consistent with each other; but subject to the provisions of this article on parol or extrinsic evidence (§ 25-2-202) negation or limitation is inoperative to the extent that such construction is unreasonable.
"(2) Subject to subsection (3), to exclude or modify the implied warranty of merchantability or any part of it the language must mention merchantability and in case of a writing must be conspicuous, and to exclude or modify any implied warranty of fitness the exclusion must be by a writing and conspicuous. Language to exclude all implied warranties of fitness is sufficient if it states, for example, that `There are no warranties which extend beyond the description on the face hereof.'
* * * * * *
"(4) Remedies for breach of warranty can be limited in accordance with the provisions of this article on liquidation or limitation of damages and on contractual modification of remedy (§§ 25-2-718 and 25-2-719)."
This statute is not in conflict with the provision of the North Carolina Seed Law referred to in Gore v. Ball, Inc., supra. It clearly permits a seller of seed, just as a seller of other merchandise, to incorporate in his contract a disclaimer of any warranty of merchantability or of fitness for purpose provided he complies with the conditions stated in subsection (2). In the present case, the disclaimer clause complies with those conditions.
In GS 25-2-719 the Uniform Commercial Code provides:
*325 "Contractual modification or limitation of remedy.(1) Subject to the provisions of subsections (2) and (3) of this section and of the preceding section [25-2-718] 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 chapter.
"(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." (Emphasis added.)
In GS 25-2-718, referred to in the above quoted section, the Uniform Commercial Code provides:
"Liquidation or limitation of damages; deposits.(1) Damages for breach by either party may be liquidated in the agreement but only at an amount which is reasonable in the light of the anticipated or actual harm caused by the breach, the difficulties of proof of loss, and the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy. A term fixing unreasonably large liquidated damages is void as a penalty. * * *" (Emphasis added.)
Since in the present case we do not have any breach by the seller of a warranty of conformity to label, i. e., the type of seed ordered was actually delivered, we express no opinion as to whether, where there has been such a breach, a limitation of the buyer to the recovery of the purchase price is "reasonable in the light of the anticipated or actual harm caused by the breach."
We note that the official comment to GS 25-2-719 by the committee which drafted the Uniform Commercial Code states:
"Under this section parties are left free to shape their remedies to their particular requirements and reasonable agreements limiting or modifying remedies are to be given effect.
"However, it is of the very essence of a sales contract that at least minimum adequate remedies be available. If the parties intend to conclude a contract for sale within this Article they must accept the legal consequence that there be at least a fair quantum of remedy for breach of the obligations or duties outlined in the contract. Thus any clause purporting to modify or limit the remedial provisions of this Article in an unconscionable manner is subject to deletion and in that event the remedies made available by this Article are applicable as if the stricken clause had never existed. * * *" (Emphasis added.)
For the reasons hereinabove stated, we find no error in the judgment of the Superior Court prejudicial to the plaintiff, and the decision of the Court of Appeals affirming that judgment is, therefore, affirmed.
AFFIRMED.