Chapter 402

402.717 402.717 Deduction of damages from the price. The buyer on notifying the seller of the buyer’s intention to do so may deduct all or any part of the damages resulting from any breach of the contract from any part of the price still due under the same contract.

402.717 History History: 1991 a. 316.

402.718 402.718 Liquidation or limitation of damages; deposits.

402.718(1) (1) Damages for breach by either party may be liquidated in the agreement but only at an amount which is reasonable in the light of the anticipated or actual harm caused by the breach, the difficulties of proof of loss, and the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy. A term fixing unreasonably large liquidated damages is void as a penalty.

402.718(2) (2) Where the seller justifiably withholds delivery of goods because of the buyer’s breach, the buyer is entitled to restitution of any amount by which the sum of the buyer’s payments exceeds:

402.718(2)(a) (a) The amount to which the seller is entitled by virtue of terms liquidating the seller’s damages in accordance with sub. (1); or

402.718(2)(b) (b) In the absence of such terms, 20 percent of the value of the total performance for which the buyer is obligated under the contract or $500, whichever is smaller.

402.718(3) (3) The buyer’s right to restitution under sub. (2) is subject to offset to the extent that the seller establishes:

402.718(3)(a) (a) A right to recover damages under this chapter other than sub. (1); and

402.718(3)(b) (b) The amount or value of any benefits received by the buyer directly or indirectly by reason of the contract.

402.718(4) (4) Where a seller has received payment in goods their reasonable value or the proceeds of their resale shall be treated as payments for the purpose of sub. (2); but if the seller has notice of the buyer’s breach before reselling goods received in part performance, the seller’s resale is subject to the conditions laid down in s. 402.706 on resale by an aggrieved seller.

402.718 History History: 1991 a. 316; 2009 a. 177.

402.718 Annotation The unreasonableness of liquidated damages is properly a matter of defense. The defendant could not raise the question of unreasonable liquidated damages by demurrer. Northwestern Motor Car, Inc. v. Pope, 51 Wis. 2d 292, 187 N.W.2d 200 (1971).

402.718 Annotation If a stipulated damages clause is valid, mitigation of damages is not applicable to determine damages. Wassenaar v. Panos, 111 Wis. 2d 518, 331 N.W.2d 357 (1983).

402.718 Annotation The test to determine whether a stipulated damages provision is enforceable is whether the clause is reasonable under the totality of the circumstances, and the party seeking to avoid enforcement bears the burden to show the clause is unreasonable. To determine reasonableness, a court considers the following factors: 1) whether the parties intended to provide for damages or for a penalty; 2) whether the injury caused by the breach would be difficult or incapable of accurate estimation at the time of entering into the contract; and 3) whether the stipulated damages are a reasonable forecast of the harm caused by the breach. Convenience Store Leasing & Management v. Annapurna Marketing, 2019 WI App 40, 388 Wis. 2d 353, 933 N.W.2d 110, 17-1505.

402.719 402.719 Contractual modification or limitation of remedy.

402.719(1) (1) Subject to subs. (2) and (3) and to s. 402.718 on liquidation and limitation of damages:

402.719(1)(a) (a) The agreement may provide for remedies in addition to or in substitution for those provided in this chapter and may limit or alter the measure of damages recoverable under this chapter, as by limiting the buyer’s remedies to return of the goods and repayment of the price or to repair and replacement of nonconforming goods or parts; and

402.719(1)(b) (b) Resort to a remedy as provided is optional unless the remedy is expressly agreed to be exclusive, in which case it is the sole remedy.

402.719(2) (2) Where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in chs. 401 to 411.

402.719(3) (3) Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable. Limitation of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable but limitation of damages where the loss is commercial is not.

402.719 History History: 1979 c. 89; 1991 a. 148, 304, 315.

402.719 Annotation A commercial contract clause that limited consequential damages was unconscionable. Trinkle v. Schumacher Co., 100 Wis. 2d 13, 301 N.W.2d 255 (Ct. App. 1980).

402.719 Annotation The remedy under sub. (2) was proper when a damage clause provided damages that were, under the circumstances, unconscionably low. Phillips Petroleum Co. v. Bucyrus-Erie Co., 131 Wis. 2d 21, 388 N.W.2d 584 (1986).

402.719 Annotation A purchaser cannot claim that a warranty provision has failed of its essential purpose merely because a potential claim did not arise until after the warranty period had expired. Wisconsin Power & Light Co. v. Westinghouse Electric Corp., 830 F.2d 1405 (1987).

402.719 Annotation In interpreting subs. (2) and (3), the Wisconsin Supreme Court has adopted the “dependent approach.” Under the dependent approach, if a litigant proves a limited remedy fails of its essential purpose under sub. (2), any accompanying consequential damages disclaimer is per se unconscionable under sub. (3). Sanchelima International, Inc. v. Walker Stainless Equipment Co., 920 F.3d 1141 (2019).

402.719 Annotation A damage disclaimer is not enforceable if the remaining exclusive remedy fails of its essential purpose. Rich Products Corp. v. Kemutec, Inc., 66 F. Supp. 2d 937 (1999).

402.720 402.720 Effect of “cancellation” or “rescission” on claims for antecedent breach. Unless the contrary intention clearly appears expressions of “cancellation” or “rescission” of the contract or the like shall not be construed as a renunciation or discharge of any claim in damages for the antecedent breach.

402.721 402.721 Remedies for fraud. Remedies for material misrepresentation or fraud include all remedies available under this chapter for nonfraudulent breach. Neither rescission or a claim for rescission of the contract for sale nor rejection or return of the goods shall bar or be deemed inconsistent with a claim for damages or other remedy.

402.722 402.722 Who can sue 3rd parties for injury to goods. Where a 3rd party so deals with goods which have been identified to a contract for sale as to cause actionable injury to a party to that contract:

402.722(1) (1) A right of action against the 3rd party is in either party to the contract for sale who has title to or a security interest or a special property or an insurable interest in the goods; and if the goods have been destroyed or converted a right of action is also in the party who either bore the risk of loss under the contract for sale or has since the injury assumed that risk as against the other;

402.722(2) (2) If at the time of the injury the party plaintiff did not bear the risk of loss as against the other party to the contract for sale and there is no arrangement between them for disposition of the recovery, the plaintiff’s suit or settlement is, subject to the plaintiff’s own interest, as a fiduciary for the other party to the contract;

402.722(3) (3) Either party may with the consent of the other sue for the benefit of whom it may concern.

402.722 History History: 1991 a. 316; 2005 a. 253.

402.723 402.723 Proof of market price: time and place.

402.723(1) (1) If an action based on anticipatory repudiation comes to trial before the time for performance with respect to some or all of the goods, any damages based on market price (ss. 402.708 or 402.713) shall be determined according to the price of such goods prevailing at the time when the aggrieved party learned of the repudiation.

402.723(2) (2) If evidence of a price prevailing at the times or places described in this chapter is not readily available the price prevailing within any reasonable time before or after the time described or at any other place which in commercial judgment or under usage of trade would serve as a reasonable substitute for the one described may be used, making any proper allowance for the cost of transporting the goods to or from such other place.

402.723(3) (3) Evidence of a relevant price prevailing at the time or place other than the one described in this chapter offered by one party is not admissible unless and until that party has given the other party such notice as the court finds sufficient to prevent unfair surprise.

402.723 History History: 1991 a. 316.

402.724 402.724 Admissibility of market quotations. Whenever the prevailing price or value of any goods regularly bought and sold in any established commodity market is in issue, reports in official publications or trade journals or in newspapers or periodicals of general circulation published as the reports of such market shall be admissible in evidence. The circumstances of the preparation of such a report may be shown to affect its weight but not its admissibility.

402.725 402.725 Statute of limitations in contracts for sale.

402.725(1) (1) An action for breach of any contract for sale must be commenced within 6 years after the cause of action has accrued. By the original agreement the parties, if they are merchants, may reduce the period of limitation to not less than one year. The period of limitation may not otherwise be varied by agreement.

402.725(2) (2) A cause of action accrues when the breach occurs, regardless of the aggrieved party’s lack of knowledge of the breach. A breach of warranty occurs when tender of delivery is made, except that where a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance the cause of action accrues when the breach is or should have been discovered.

402.725(3) (3) Where an action commenced within the time limited by sub. (1) is so terminated as to leave available a remedy by another action for the same breach such other action may be commenced after the expiration of the time limited and within 6 months after the termination of the first action unless the termination resulted from voluntary discontinuance or from dismissal for failure or neglect to prosecute.

402.725(4) (4) This section does not alter the law on tolling of the statute of limitations nor does it apply to causes of action which have accrued before chs. 401 to 409 or before ch. 410 or 411 became effective.

402.725 History History: 1979 c. 89; 1991 a. 148, 304, 315.

402.725 Annotation A stringent standard applies in determining whether a warranty explicitly extends to future performance. There must be specific reference to a future time in the warranty, satisfied when a warranty guarantees a product for a particular number of years, or for a less precise, but still determinable, period. Selzer v. Brunsell Brothers, Ltd., 2002 WI App 232, 257 Wis. 2d 809, 652 N.W.2d 806, 01-2625.

402.725 Annotation Implied warranties cannot, by their nature, explicitly extend to future performance. The statute of limitations will always start to run against claims based on implied warranty from the time when delivery of the goods is tendered. Selzer v. Brunsell Brothers, Ltd., 2002 WI App 232, 257 Wis. 2d 809, 652 N.W.2d 806, 01-2625.

402.725 Annotation While all warranties in a general sense apply to the future performance of goods, the future performance exception in sub. (2) applies only when the warranty explicitly extends to future performance. Evidence that the goods break or physically deteriorate after delivery may be relevant to whether the goods were fit at the time of delivery for the ordinary purpose for which they are used; but consideration of that evidence for that purpose does not impose an express warranty for future performance. City of Stoughton v. Thomasson Lumber Co., 2004 WI App 6, 269 Wis. 2d 339, 675 N.W.2d 487, 02-2192.

402.725 Annotation The county was a “merchant” under s. 402.104 for purposes of the limitation under sub. (1). County of Milwaukee v. Northrop Data Systems, Inc., 602 F.2d 767 (1979).

402.725 Annotation Wisconsin law was applied despite a contrary choice of law provision in the contract. Office Supply Co. v. Basic/Four Corp., 538 F. Supp. 776 (1982).

402.725 Annotation In this case, both the new vehicle limited warranty, which was effective for four years or 50,000 miles, whichever came first, and the certified pre-owned warranty, which expired on August 11, 2016, or when the vehicle’s odometer reached 100,000 miles, whichever came first, extended to future performance under sub. (2). Accordingly, the causes of action associated with breach of those warranties accrued when the vehicle’s owner discovered or should have discovered the breach. Bryant v. BMW of North America LLC, 585 F. Supp. 3d 1178 (2022).