## Facts

- Cowin Equipment Company, Inc. was an authorized dealer of Terex-brand heavy equipment manufactured by General Motors Corporation (GMC).
- In early 1978, anticipating higher demand, GMC implemented a “Planned Distribution Program” (PDP) requiring dealers to place advance, non-cancellable equipment orders for shipment between September 1, 1978 and August 1, 1979.
- Under the parties’ earlier course of dealing, cancellations had been allowed liberally despite written language addressing cancellation notice.
- After the PDP began, Cowin placed orders for 44 machines.
- An economic downturn reduced demand, and Cowin attempted to cancel some orders.
- GMC refused cancellation, enforced the non-cancellation requirement, and delivered the machines, leaving Cowin with excess inventory.
- Cowin sued in federal district court seeking monetary damages (including financing interest, insurance, storage and maintenance costs, and resale losses), alleging the PDP non-cancellation requirement was unconscionable under U.C.C. § 2-302.
- The district court denied GMC’s summary-judgment motion, treating the case as an unconscionability action for damages and holding the PDP term unconscionable as a matter of law; the order was certified for interlocutory appeal.

## Issues

1. Whether U.C.C. § 2-302 creates an affirmative cause of action for money damages based solely on the unconscionability of a contract term.

## Decision

- The Eleventh Circuit reversed the district court’s denial of summary judgment to the extent it recognized a damages remedy under U.C.C. § 2-302.
- The court held U.C.C. § 2-302 does not authorize an independent claim for damages; it provides remedies tied to enforcement (or refusal of enforcement) of unconscionable terms.
- Because Cowin’s theory sought damages solely on the basis of alleged unconscionability under § 2-302, GMC was entitled to judgment as a matter of law on that theory.

## Legal Principles

- U.C.C. § 2-302 is a remedial provision allowing a court to: (1) refuse to enforce an unconscionable contract, (2) enforce the remainder without the unconscionable clause, or (3) limit application of the clause to avoid an unconscionable result.
- Section 2-302 does not create an affirmative cause of action for consequential or other money damages based solely on unconscionability.
- Unconscionability functions primarily to prevent or limit enforcement of harsh terms, consistent with its equitable origins, rather than to supply a standalone damages remedy.

## Conclusion

The court held that unconscionability under U.C.C. § 2-302 operates as a limit on enforcement of unfair contract terms and does not, by itself, provide a basis for a plaintiff to recover money damages.


Cowin Equip. Co. v. Gen. Motors Corp., 734 F.2d 1581 (11th Cir. 1984)