Aside from disclaiming warranties, how can a seller limit exposure to contract liability?
The UCC, with limited exceptions, allows contracting parties to allocate and divide risk between them as they see fit. Pursuant to this authority, a seller should limit its potential contractual liability by doing the following:
- Disclaiming incidental and consequential damages;
- Limiting the contractual remedy for nonconforming goods to repairing or replacing the goods, with it being at the seller’s discretion as to whether to repair or replace;
- Include a reasonable liquidated damages cap or formula; and
- Set the statute of limitations for contract claims under the agreement at one year—shortening it from the default four-year statute of limitations.