Question: PopCo, Inc., which is in the business of bottling and distributing soft drinks, purchased bottle-labeling equipment from Gemini Industries Co. The contract stated that in the event of a breach of contract, PopCo's remedy was limited to repair, replacement, or refund. When the equipment was installed in PopCo's plant, problems arose immediately. Gemini attempted to repair the equipment, but when it still did not work properly several months later, Gemini refunded the purchase price, and PopCo returned the equipment.

PopCo then asked Gemini to pay PopCo for the losses it had incurred due to the equipment's failure and the delay in obtaining alternative machinery. Gemini claimed that it owed nothing to PopCo because its remedy for breach was limited to repair, replacement, or refund. PopCo asserted that the limited remedy had failed of its essential purpose. In the lawsuit that followed, the court granted summary judgment in Gemini's favor, and PopCo appealed.

Assume that you are a judge on the appellate court reviewing the case, and answer the following questions.

1. PopCo argued that Gemini had eliminated the remedy of "refund" by electing to pursue repair or replacement; thus, the remedy had failed in its essential purpose. Do you find PopCo's argument persuasive?

2. In whose favor will you rule in this case, and why?

3. Suppose that PopCo had argued that Gemini's limitation of its remedies was unconscionable. How would you respond to this argument?