## Facts

- Arthur and Kathy Nelson bought a Curtis Mathes television from a retailer, trading in their old set for a discount.
- The written warranty provided repair or replacement of defective parts and conspicuously stated it “Excludes All Incidental and Consequential Damages.”
- A fire allegedly caused by a defect in the television damaged the Nelsons’ home; the claimed losses were property damage, not personal injury.
- The Nelsons sued the seller, the manufacturer-related entities, and NEC Technologies, Inc. (NEC), alleging strict liability, negligence, and breach of warranty, and seeking consequential property damages.
- The trial court granted partial summary judgment enforcing the consequential-damages exclusion as not unconscionable and granted summary judgment to NEC, finding it was a distributor/importer rather than the manufacturer and not the manufacturer’s alter ego.
- The intermediate appellate court reversed both rulings; the Supreme Court of Georgia reviewed those reversals.

## Issues

1. Whether a consumer warranty clause excluding incidental and consequential damages for consequential property loss is unconscionable under OCGA § 11-2-719(3).
2. Whether NEC, an exclusive importer/marketer/distributor of components made by a related company, could be treated as the manufacturer by piercing the corporate veil under an alter-ego theory.

## Decision

- The Supreme Court of Georgia reversed the intermediate appellate court and reinstated the trial court’s summary-judgment rulings on both issues.
- The consequential-damages exclusion for property damage was enforceable and not unconscionable on the record presented.
- Summary judgment for NEC was proper because the evidence did not support veil-piercing or alter-ego liability.

## Legal Principles

- Under OCGA § 11-2-719(3), sellers may limit or exclude consequential damages unless the limitation is unconscionable.
- In consumer-goods cases, a limitation of consequential damages for personal injury is prima facie unconscionable; that presumption does not apply to consequential property damages.
- Unconscionability analysis considers both procedural factors (e.g., clarity, conspicuousness, and absence of unfair surprise) and substantive factors (e.g., whether the risk allocation is oppressively one-sided in context).
- A conspicuous, comprehensible exclusion paired with a meaningful repair-or-replacement remedy may be enforced absent case-specific proof of procedural or substantive unconscionability.
- Corporate veil-piercing requires evidence such as disregard of corporate formalities, commingling, domination/control rendering separateness a sham, and resulting fraud, injustice, or inequity.
- An exclusive distributorship or close business relationship, without evidence of domination or misuse of the corporate form, is insufficient to impose manufacturer liability on a distributor via alter-ego doctrine.

## Conclusion

The court held that a consumer warranty’s clear exclusion of consequential property damages is generally enforceable absent specific proof of unconscionability, and that a distributor cannot be treated as the manufacturer without evidence justifying veil-piercing under Georgia alter-ego standards.


NEC Techs., Inc. v. Nelson, 267 Ga. 390, 478 S.E.2d 769 (Ga. 1996)