## Facts

- A & M Produce Co., an Imperial Valley farming business owned by C. Alex Abatti, decided to enter the tomato market despite having no prior experience with tomatoes or weight-sizing equipment.
- After receiving a higher bid from another supplier that included a hydrocooler, A & M sought a competing bid from FMC Corporation for a weight-sizing machine.
- FMC’s representatives recommended FMC’s equipment and advised that it operated fast enough that a hydrocooler was unnecessary, saving A & M substantial cost.
- A & M purchased FMC’s weight-sizer for about $32,000 using FMC’s preprinted order form.
- The order form broadly disclaimed express and implied warranties and excluded consequential damages.
- After installation, the machine allegedly failed to sort tomatoes fast enough; without a hydrocooler, the tomatoes developed fungus and the crop was ruined.
- A & M offered to return the machine for a refund of the down payment and freight costs; FMC rejected the offer and demanded full payment.

## Issues

1. Whether the contract clauses disclaiming warranties and excluding consequential damages were unconscionable under California’s UCC.
2. Whether those clauses could bar liability for crop-loss damages allegedly caused by the machine’s failure and FMC’s recommendations.
3. What constitutes procedural and substantive unconscionability in a commercial sale using a standardized form contract.

## Decision

- The Court of Appeal affirmed the judgment for A & M.
- The trial court properly found the warranty disclaimers and consequential-damages exclusion unconscionable and removed them from the jury’s consideration.
- The court upheld the jury’s damages award, rejecting the argument that crop-loss damages were impermissibly speculative.

## Legal Principles

- Unconscionability has both procedural and substantive components; some degree of each is required, and the required showing operates on a sliding scale.
- Procedural unconscionability may be shown by oppression (inequality of bargaining power and absence of meaningful choice) and surprise (risk-shifting terms hidden in a prolix printed form and not negotiated or called out).
- Substantive unconscionability focuses on whether a term reallocates risk in an objectively unreasonable or unexpected manner, particularly where it deprives the buyer of the basic benefit of the transaction.
- A seller’s boilerplate disclaimers and damage limitations may be unenforceable when they conflict with affirmative performance representations that formed the basis of the bargain.
- Under the UCC, a court may refuse to enforce unconscionable clauses while enforcing the remainder of the contract, permitting consequential damages despite a printed exclusion when the exclusion is unconscionable.
- Lost-crop damages may be recoverable when supported by evidence of crop condition, expected yield, and market price; lack of prior experience with the crop does not alone make damages speculative where the plaintiff is an experienced farmer and the evidentiary foundation is sufficient.

## Conclusion

The court enforced UCC unconscionability limits against a seller’s standardized warranty disclaimers and consequential-damages exclusion where the buyer relied on the seller’s performance assurances for specialized equipment and the boilerplate terms would have shifted the entire risk of crop failure to the buyer in an unreasonable and unexpected way.


A & M Produce Co. v. FMC Corp., 135 Cal. App. 3d 473, 186 Cal. Rptr. 114 (Cal. Ct. App. 1982)