## Facts

- Shante Razor purchased a new Hyundai Sonata and separately purchased an optional remote starter/alarm package sold through the dealer and installed by a third party.
- Hyundai Motor America provided a 5-year/60,000-mile written warranty generally promising repair or replacement of defective Hyundai components.
- The written warranty stated it did not cover non-Hyundai accessories and purported to exclude incidental and consequential damages (including loss of use, inconvenience, and similar losses).
- Razor did not receive or see the written warranty (including the damages exclusion) at or before contracting; she first saw it after delivery in the owner’s manual kept in the glove compartment.
- Razor experienced repeated starting problems and multiple unsuccessful repair attempts.
- Razor sued for breach of written warranty and implied warranty of merchantability under the Magnuson-Moss Warranty Act and Illinois UCC.
- The trial court refused to enforce the consequential-damages exclusion as unconscionable; a jury awarded diminished-value damages, consequential damages, and attorney’s fees.
- The appellate court affirmed; Hyundai appealed to the Illinois Supreme Court, challenging only damages and the enforceability of the consequential-damages exclusion.

## Issues

1. Whether a consequential-damages exclusion in a consumer warranty is enforceable when the buyer did not receive or see the warranty until after the sale was completed.
2. Whether the evidence was sufficient to support the jury’s award of diminished-value (warranty) damages.
3. Whether the relationship between a limited repair-or-replace remedy and a separate consequential-damages exclusion affects enforceability of the exclusion.

## Decision

- The court affirmed the refusal to enforce the consequential-damages exclusion, holding it procedurally unconscionable because it was not disclosed to the buyer at or before the time of contracting.
- The court affirmed the award of consequential damages and attorney’s fees.
- The court reversed the jury’s diminished-value award due to insufficient evidentiary support.
- The court remanded for a new trial limited to determining warranty (diminished-value) damages, permitting proper valuation evidence.

## Legal Principles

- Under Illinois UCC principles (applied within Magnuson-Moss claims), consequential-damages exclusions are permitted in principle but are unenforceable if unconscionable.
- A limitation or exclusion that materially affects a consumer’s remedies must be communicated to the buyer at or before contract formation to be binding; post-sale disclosure can support a finding of procedural unconscionability.
- A limited repair-or-replace remedy and a consequential-damages exclusion are analyzed separately; failure of essential purpose of the limited remedy does not automatically invalidate a separate consequential-damages exclusion, though the exclusion may still fail on unconscionability grounds.
- Diminished-value damages must be supported by competent evidence of value reduction; inadequate proof warrants reversal and retrial limited to damages.

## Conclusion

The Illinois Supreme Court held that Hyundai could not enforce a consequential-damages exclusion that was first provided to the consumer only after the sale, affirmed consequential damages and fees, and ordered a new trial limited to diminished-value warranty damages due to insufficient proof of the vehicle’s reduced value.


Razor v. Hyundai Motor Am., 854 N.E.2d 607 (Ill. 2006)