## Facts

- A farmer purchased the herbicide Basalin from a retail distributor; the product was manufactured by BASF Wyandotte Corporation (BWC).
- Basalin’s label included an express warranty of conformity and fitness for labeled purposes, and it instructed buyers to return the product unopened if terms were unacceptable.
- The label also excluded “consequential, special or indirect damages” resulting from use or handling of the product.
- The farmer applied Basalin to roughly 1,450 acres of soybeans and applied a different herbicide (Treflan) to roughly 200 acres.
- During a year with severe drought, the farmer alleged the Treflan-treated soybeans performed materially better in yield and quality than the Basalin-treated soybeans.
- The farmer sued for breach of warranty seeking damages tied to the crop shortfall.
- After federal appellate proceedings validated the label’s limitation on consequential damages and restricted the case to written warranties, the federal district court certified to the state supreme court the question of the proper measure of “actual” damages under the South Carolina UCC when consequential damages are excluded.

## Issues

1. Under S.C. Code § 36-2-714, what is the proper measure of “actual” or “direct” damages in a herbicide failure case when the seller validly excludes consequential damages under § 36-2-715?
2. Whether diminished crop yield and quality may be recovered as direct damages, rather than barred as consequential damages, when the product’s label excludes consequential, special, or indirect damages.

## Decision

- The court answered the certified question by holding that direct damages are not limited to the purchase price of the herbicide.
- The proper measure of direct damages is the difference between the value of the crop actually produced and the value of the crop that would have been produced had the herbicide performed as warranted.
- The buyer may prove this difference through evidence of reduced yield and quality attributable to the product’s failure, converted to monetary value.
- The contractual exclusion remains effective only as to damages that are properly classified as consequential under § 36-2-715.

## Legal Principles

- Under UCC § 2-714 (S.C. Code § 36-2-714), damages for breach of warranty for accepted goods are measured by the benefit-of-the-bargain difference between the value of the goods as accepted and as warranted, plus any other recoverable loss under the Code.
- In transactions involving agricultural chemicals purchased for their effect on crop production, the benefit-of-the-bargain measure of direct damages may be reflected in diminished crop value (yield and quality) caused by the product’s nonconforming performance.
- A valid exclusion of consequential damages under UCC § 2-719(3) (applied through § 2-715’s definition) bars only consequential damages; it does not bar recovery of direct damages under § 2-714.

## Conclusion

The court held that, even when a herbicide label validly excludes consequential damages, the buyer’s recoverable direct damages for breach of warranty may be measured by the proven difference between the crop’s actual value and its value had the herbicide performed as warranted, rather than being confined to a refund of the product’s purchase price.


Hill v. BASF Wyandotte Corp., 311 S.E.2d 734 (S.C. 1984)