ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Tuesday, February 27, 2018

Waiver of consequential damages is not unconscionable

A recent case out of the Northern District of Illinois, Talcott Communications Corp. v. Quad/Graphics Printing Corp., Case No. 17 C 2278, deals with the enforceability of contract provisions prohibiting consequential damages. 

Talcott sued Quad/Graphics for breach of contract and sought losses in advertising revenue when its advertisers left it because of Quad/Graphics's alleged breach. Quad/Graphics contended that consequential damages were waived under the contract and so Talcott could not seek the loss in advertising revenues. Talcott countered that the provision was unconscionable. 

The court found the provision was not unconscionable. Talcott provided no evidence that Quad/Graphics did anything questionable during the negotiation of the contract. Talcott argued that it was "outgunned" because Quad/Graphics was a bigger company, but Talcott itself was a sophisticated business and there were no allegations of high-pressure negotiating tactics by Quad/Graphics. There was simply not enough bargaining disparity between the parties, nor enough evidence of coercive behavior to raise the court's concern procedurally. 

Nor was the waiver of consequential damages substantively unconscionable. The court noted that Quad/Graphics would still be liable for any compensatory damages, and the waiver of consequential damages is routinely enforced by courts. 

The court therefore granted summary judgment in favor of Quad/Graphics on Talcott's claim. (However, it denied Quad/Graphics's motion for summary judgment on its counterclaim as there was not a sufficient showing to justify summary judgment.)

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It would have been shocking for the court to find the clause (assuming it is a traditional waiver of consequential damages) substantively unconscionable since, as the Court noted, they are used often and universally enforced. Procedural unconscionability is always difficult to establish in a commercial non-consumer setting.

Posted by: Christopher Ng | Feb 27, 2018 9:32:40 PM

Totally agreed. I think this was a long-shot case for unconscionability, based on the facts provided in the opinion.

Posted by: Stacey | Mar 1, 2018 11:03:24 AM

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