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Keywords

contractdamagesappealtrialsummary judgmentcorporation
contractdamagesappealcorporationrespondent

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M.A. Mortenson Co., Inc. v. Timberline Software Corp., 140 Wash.2d 568, 998 P.2d 305, 41 UCC Rep.Serv.2d 357, Prod.Liab.Rep. (CCH) P 15,893

Facts

M.A. Mortenson Company, a construction contractor, purchased software from Timberline Software Corporation through its dealer, Softworks. After using the software to prepare a bid, Mortenson discovered that the bid was significantly lower than intended due to software malfunctions. Mortenson sued Timberline for breach of warranties, claiming the software was defective. The trial court granted summary judgment in favor of Timberline, leading to an appeal.

Petitioner Mortenson is a nationwide construction contractor with its corporate headquarters in Minnesota and numerous regional offices, including a northwest regional office in Bellevue, Washington. Respondent Timberline is a software developer located in Beaverton, Oregon. Respondent Softworks, an authorized dealer for Timberline, is located in Kirkland, Washington and provides computer-related services to contractors such as Mortenson.

Issue

Whether a limitation on consequential damages enclosed in a shrinkwrap license accompanying computer software is enforceable against the purchaser of the licensed software.

Whether a limitation on consequential damages enclosed in a shrinkwrap license accompanying computer software is enforceable against the purchaser of the licensed software.

Rule

The court held that the terms of the shrinkwrap license were part of a layered contract between the seller and buyer, and limitations on consequential damages are generally valid unless found to be unconscionable.

The court held that the terms of the shrinkwrap license were part of a layered contract between the seller and buyer, and limitations on consequential damages are generally valid unless found to be unconscionable.

Analysis

The court analyzed the contract formation and determined that the purchase order did not constitute a fully integrated contract, allowing the terms of the shrinkwrap license to be enforceable. The court found that Mortenson's use of the software constituted acceptance of the license terms, which included a limitation on consequential damages. The court also addressed the unconscionability claim, concluding that the limitation clause was not substantively or procedurally unconscionable.

The court analyzed the contract formation and determined that the purchase order did not constitute a fully integrated contract, allowing the terms of the shrinkwrap license to be enforceable.

Conclusion

The Supreme Court affirmed the Court of Appeals' decision, holding that the limitation on consequential damages in the shrinkwrap license was enforceable.

The Supreme Court affirmed the Court of Appeals' decision, holding that the limitation on consequential damages in the shrinkwrap license was enforceable.

Who won?

Timberline Software Corporation prevailed in the case because the court upheld the enforceability of the limitation on consequential damages in the shrinkwrap license.

Timberline Software Corporation prevailed in the case because the court upheld the enforceability of the limitation on consequential damages in the shrinkwrap license.

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