Alex Abatti was the sole owner of A&M Produce Company (A&M), a small farming company located in California’s Imperial Valley. Although Abatti had never grown tomatoes, he decided to do so. He sought the advice of FMC Corporation (FMC), a large diversified manufacturer of farming and other equipment, as to what kind of equipment he would need to process the tomatoes. An FMC representative recommended a certain type of machine, which A&M purchased from FMC pursuant to a form sales contract provided by FMC. Within the fine print, the contract contained one clause that disclaimed any warranty liability by FMC and a second clause which stated that FMC would not be liable for consequential damages if the machine malfunctioned.
A&M paid $10,680 down toward the $32,041 purchase price, and FMC delivered and installed the machine. A&M immediately began experiencing problems with the machine. It did not process the tomatoes quickly enough. Tomatoes began piling up in front of the belt that separated the tomatoes for weight-sizing. Overflow tomatoes had to be sent through the machine at least twice, causing damage to them. Fungus spread through the damaged crop. Because of these problems, the machine had to be continually started and stopped, which  significantly reduced processing speed.
A&M tried on several occasions to get additional equipment from FMC, but on each occasion, its request was rejected. Because of the problems with the machine, A&M closed its tomato operation. A&M finally stated “Let’s call the whole thing off” and offered to return the machine if FMC would refund A&M’s down payment. When FMC rejected this offer and demanded full payment of the balance due, A&M sued to recover its down payment and damages. It alleged breach of warranty caused by defect in the machine. In defense, FMC pointed to the fine print of the sales contract, stating that the buyer waived any rights to sue it for breach of warranty or to recover consequential damages from it. A&M Produce Co. v. FMC Corp., 135 Cal. App.3d 473, 186 Cal. Rptr. 114, 1982 Cal. App. Lexis 1922 (Court of Appeal of California)
1. Did A&M act morally in signing the contract and then trying to get out from under its provisions?
2. Was it ethical for FMC to include waiver of liability and waiver of consequential damages clauses in its form contract?
3. Legally, are the waiver clauses unconscionable and therefore unenforceable?