Document Type

Article

Publication Date

2013

Abstract

While many courts refuse to strike down these clauses under the unconscionability test, this Article argues that the results from the Remedies Experiment should lead courts to adopt a different set of tests for ruling on the enforceability of limitation-of-remedy clauses in home purchase contracts. Part I of this Article highlights the relevant results from two empirical studies Professor Stark conducted regarding major problems with the fairness of purchase agreement forms used by residential real estate developers in Illinois. Part I also discusses the lack of home purchaser understanding of key relevant laws and legal documents examined in an empirical study conducted by Professor Michael Braunstein in Columbus, Ohio. Part II of this Article contains a detailed report of the results from the Remedies Experiment we ran. This experiment demonstrated that, contrary to the assumption of many judges, even after carefully reviewing limitation-of-remedies clauses, a very large percentage of laypersons believed they were entitled to remedies that were "clearly" (at least to an attorney or judge's eyes) excluded in the contract clause. In Part III, the Article examines and critiques case law on the enforceability of these limitation-of-remedies clauses noting the split of authority among the reported case law in the United States on this issue and why Florida's approach of providing greater protection to home purchasers is more appropriate. In Part IV, the Article proposes four legal reforms to address the problem of dysfunctional contracts that contain highly unfair and problematic remedies clauses.