The full case caption appears at the
end of this opinion. JOHNSON, J. — This case presents the issue of whether a limitation onconsequential damages enclosed in a ‘shrinkwrap license’ accompanyingcomputer software is enforceable against the purchaser of the licensedsoftware. Petitioner M.A. Mortenson Company, Inc. (Mortenson), a generalconstruction contractor, purchased licensed computer software fromTimberline Software Corporation (Timberline) through Softworks DataSystems, Inc. (Softworks), Timberline’s local authorized dealer. AfterMortenson used the program to prepare a construction bid and discovered thebid was $1.95 million less than it should have been, Mortenson suedTimberline for breach of warranties alleging the software was defective.The trial court granted Timberline’s motion for summary judgment. TheCourt of Appeals affirmed the order of summary judgment, holding (1) thepurchase order between the parties was not an integrated contract; (2) thelicensing agreement set forth in the software packaging and instructionmanuals was part of the contract between Mortenson and Timberline; and (3)the provision limiting Mortenson’s damages to recovery of the purchaseprice was not unconscionable. M.A. Mortenson Co. v. Timberline SoftwareCorp., 93 Wn. App. 819, 826-37, 970 P.2d 803 (1999). We grantedMortenson’s petition for review and affirm the Court of Appeals. FACTS Petitioner Mortenson is a nationwide construction contractor with itscorporate headquarters in Minnesota and numerous regional offices,including a northwest regional office in Bellevue, Washington. RespondentTimberline is a software developer located in Beaverton, Oregon. Respondent Softworks, an authorized dealer for Timberline, is located inKirkland, Washington and provides computer-related services to contractorssuch as Mortenson. Since at least 1990, Mortenson has used Timberline’s Bid Analysissoftware to assist with its preparation of bids.1 Mortenson had usedMedallion, an earlier version of Bid Analysis, at its Minnesotaheadquarters and its regional offices. In early 1993, Mortenson installeda new computer network operating system at its Bellevue office andcontacted Mark Reich (Reich), president of Softworks, to reinstallMedallion. Reich discovered, however, that the Medallion software wasincompatible with Mortenson’s new operating system. Reich informedMortenson that Precision, a newer version of Bid Analysis, was compatiblewith its new operating system. Mortenson wanted multiple copies of the new software for its offices,including copies for its corporate headquarters in Minnesota and itsnorthwest regional office in Bellevue. Reich informed Mortenson he wouldplace an order with Timberline and would deliver eight copies of thePrecision software to the Bellevue office, after which Mortenson coulddistribute the copies among its offices. After Reich provided Mortenson with a price quote, Mortenson issued apurchase order dated July 12, 1993, confirming the agreed upon purchaseprice, set up fee, delivery charges, and sales tax for eight copies of thesoftware. 2 The purchase order indicated that Softworks, on behalf ofTimberline, would ‘{f}urnish current versions of Timberline Precision BidAnalysis Program Software and Keys’ and ‘{p}rovide assistance ininstallation and system configuration for Mortenson’s Bellevue Office.’ Clerk’s Papers at 206. The purchase order also contained the followingnotations: Provide software support in converting Mortenson’s existing Bid Day MasterFiles to a format accepted by the newly purchased Bid Day software. Thiswork shall be accomplished on a time and material basis of $85.00 per hour.Format information of conversion of existing D-Base Files to be shared toassist Mortenson Mid-West programmers in file conversion. -System software support and upgrades to be available from Timberline fornewly purchased versions of Bid Day Multi-User. -At some future date should Timberline upgrade ‘Bid Day’ to a windowsversion, M.A. Mortenson would be able to upgrade to this system withTimberline crediting existing software purchase toward that upgrade on apro-rated basis to be determined later. Clerk’s Papers at 206. Below the signature line the following was stated:’ADVISE PURCHASING PROMPTLY IF UNABLE TO SHIP AS REQUIRED. EACH SHIPMENTMUST INCLUDE A PACKING LIST. SUBSTITUTIONS OF GOODS OR CHANGES IN COSTSREQUIRE OUR PRIOR APPROVAL.’ Clerk’s Papers at 206.3 The purchase orderdid not contain an integration clause. Reich signed the purchase order and ordered the requested software fromTimberline. When Reich received the software, he opened the three largeshipping boxes and checked the contents against the packing invoice.Contained inside the shipping boxes were several smaller boxes, containingprogram diskettes in plastic pouches, installation instructions, and usermanuals. One of the larger boxes also contained the sealed protectiondevices for the software. 4 All Timberline software is distributed to its users under license. BothMedallion and Precision Bid Analysis are licensed Timberline products. Inthe case of the Mortenson shipment, the full text of Timberline’s licenseagreement was set forth on the outside of each diskette pouch and theinside cover of the instruction manuals. The first screen that appearseach time the program is used also references the license and states,S{t}his software is licensed for exclusive use by: Timberline Use Only.’Clerk’s Papers at 302. Further, a license to use the protection device waswrapped around each of the devices shipped to Mortenson. The followingwarning preceded the terms of the license agreement: CAREFULLY READ THE FOLLOWING TERMS AND CONDITIONS BEFORE USING THEPROGRAMS. USE OF THE PROGRAMS INDICATES YOUR ACKNOWLEDGEMENT THAT YOU HAVEREAD THIS LICENSE, UNDERSTAND IT, AND AGREE TO BE BOUND BY ITS TERMS ANDCONDITIONS. IF YOU DO NOT AGREE TO THESE TERMS AND CONDITIONS, PROMPTLYRETURN THE PROGRAMS AND USER MANUALS TO THE PLACE OF PURCHASE AND YOURPURCHASE PRICE WILL BE REFUNDED. YOU AGREE THAT YOUR USE OF THE PROGRAMACKNOWLEDGES THAT YOU HAVE READ THIS LICENSE, UNDERSTAND IT, AND AGREE TOBE BOUND BY ITS TERMS AND CONDITIONS. Clerk’s Papers at 305. Under a separate subheading, the license agreementlimited Mortenson’s remedies and provided: LIMITATION OF REMEDIES AND LIABILITY NEITHER TIMBERLINE NOR ANYONE ELSE WHO HAS BEEN INVOLVED IN THE CREATION,PRODUCTION OR DELIVERY OF THE PROGRAMS OR USER MANUALS SHALL BE LIABLE TOYOU FOR ANY DAMAGES OF ANY TYPE, INCLUDING BUT NOT LIMITED TO, ANY LOSTPROFITS, LOST SAVINGS, LOSS OF ANTICIPATED BENEFITS, OR OTHER INCIDENTAL,OR CONSEQUENTIAL DAMAGES ARISING OUT OF THE USE OR INABILITY TO USE SUCHPROGRAMS, WHETHER ARISING OUT OF CONTRACT, NEGLIGENCE, STRICT TORT, ORUNDER ANY WARRANTY, OR OTHERWISE, EVEN IF TIMBERLINE HAS BEEN ADVISED OFTHE POSSIBILITY OF SUCH DAMAGES OR FOR ANY OTHER CLAIM BY ANY OTHER PARTY.TIMBERLINE’S LIABILITY FOR DAMAGES IN NO EVENT SHALL EXCEED THE LICENSE FEEPAID FOR THE RIGHT TO USE THE PROGRAMS. Clerk’s Papers at 305. Reich personally delivered the software to Mortenson’s Bellevueoffice, and was asked to return at a later date for installation. Theparties dispute what happened next. According to Neal Ruud (Ruud),Mortenson’s chief estimator at its Bellevue office, when Reich arrived toinstall the software Reich personally opened the smaller product boxescontained within the large shipping boxes and also opened the diskettepackaging. Reich inserted the diskettes into the computer, initiated theprogram, contacted Timberline to receive the activation codes, and wrotedown the codes for Mortenson. Reich then started the programs anddetermined to the best of his knowledge they were operating properly. Ruudstates that Mortenson never saw any of the licensing information describedabove, or any of the manuals that accompanied the software. Ruud adds thatcopies of the programs purchased for other Mortenson offices were forwardedto those offices. Reich claims when he arrived at Mortenson’s Bellevue office he noticed thesoftware had been opened and had been placed on a desk, along with a manualand a protection device. Reich states he told Mortenson he would installthe program at a single workstation and ‘then they would do the rest.’Clerk’s Papers at 176. Reich proceeded to install the software and aMortenson employee attached the protection device. Reich claims heinitiated and ran the program, and then observed as a Mortenson employeerepeated the installation process on a second computer. An employee thentold Reich that Mortenson would install the software at the remainingstations. In December 1993, Mortenson utilized the Precision Bid Analysissoftware to prepare a bid for a project at Harborview Medical Center inSeattle. On the day of the bid, the software allegedly malfunctionedmultiple times and gave the following message: ‘Abort: Cannot findalternate.’ Clerk’s Papers at 60. Mortenson received this message 19times that day. Nevertheless, Mortenson submitted a bid generated by thesoftware. After Mortenson was awarded the Harborview Medical Centerproject, it learned its bid was approximately $1.95 million lower thanintended. Mortenson filed an action in King County Superior Court againstTimberline and Softworks alleging breach of express and implied warranties.After the suit was filed, a Timberline internal memorandum surfaced, datedMay 26, 1993. The memorandum stated, ‘{a} bug has been found {in thePrecision software} . . . that results in two rather obscure problems,’ andexplained, ‘{t}hese problems only happen if the following {four} conditionsare met.’ Clerk’s Papers at 224. The memorandum concluded, ‘{g}iven theunusual criteria for this problem, it does not appear to be a majorproblem.’ Clerk’s Papers at 224. Apparently, other Timberline customershad encountered the same problem and a newer version of the software wassent to some of these customers. After an extensive investigation,Timberline’s lead programmer for Precision Bid Analysis acknowledged if thefour steps identified in the memo were ‘reproduced as accurately aspossible,’ Mortenson’s error message could be replicated. Clerk’s Papersat 248. Timberline moved for summary judgment of dismissal in July 1997,arguing the limitation on consequential damages in the licensing agreementbarred Mortenson’s recovery. Mortenson countered that its entire contractwith Timberline consisted of the purchase order and it never saw or agreedto the provisions in the licensing agreement. The trial court grantedTimberline’s motion for summary judgment. The trial judge stated, ‘if thiscase had arisen in 1985 rather than 1997, I might have a different ruling’but ‘the facts in this case are such that even construing them against themoving party, the Court finds as a matter of law that the licensingagreements and limitations pertaining thereto were conspicuous andcontrolling and, accordingly, the remedies that are available to theplaintiff in this case are the remedies that were set forth in thelicensing agreement . . . .’ Report of Proceedings (Aug. 15, 1997) at 49. Mortenson appealed the summary judgment order to the Court of Appeals.5The Court of Appeals affirmed the trial court and held (1) the purchaseorder was not an integrated contract; (2) the license terms were part ofthe contract; and (3) the limitation of remedies clause was notunconscionable and, therefore, enforceable. M.A. Mortenson Co. v.Timberline Software Corp., 93 Wn. App. 819, 826-37, 970 P.2d 803 (1999).Mortenson petitioned this court for review, which we granted. ANALYSIS In reviewing an order of summary judgment, this court engages in the sameinquiry as the trial court; summary judgment will be affirmed where thereare nogenuine issues of material fact and the moving party is entitled tojudgment as a matter of law. Hertog v. City of Seattle, 138 Wn.2d 265,275, 979 P.2d 400 (1999) (citing Taggart v. State, 118 Wn.2d 195, 199, 822P.2d 243 (1992); CR 56(c)). The facts and reasonable inferences from thefacts are considered in the light most favorable to the nonmoving party.Hertog, 138 Wn.2d at 275 (citing Taggart, 118 Wn.2d at 199). Questions oflaw are reviewed de novo. Hertog, 138 Wn.2d at 275 (citing Sherman v.State, 128 Wn.2d 164, 183, 905 P.2d 355 (1995)). Applicable Law Article 2 of the Uniform Commercial Code (U.C.C.), chapter 62A RCW, appliesto transactions in goods. RCW 62A.2-102. The parties agree in theirbriefing that Article 2 applies to the licensing of software, and we acceptthis proposition. See, e.g., Aubrey’s R.V. Ctr., Inc. v. Tandy Corp., 46Wn. App. 595, 600, 731 P.2d 1124 (1987) (accepting agreement of partiesthat U.C.C. Article 2 applied to transaction involving defective software);Advent Sys. Ltd. v. Unisys Corp., 925 F.2d 670, 675-76 (3d Cir. 1991)(holding that computer software falls within definition of a ‘good’ underU.C.C. Article 2).6 Integration of the Contract Mortenson contends because the purchase order fulfilled the basicrequirements of contracting under the U.C.C., it constituted a fullyintegrated contract. As a result, Mortenson argues the terms of thelicense, including the limitation of remedies clause, were not part of thecontract and, thus, are not enforceable. Timberline counters that theparties did not intend the purchase order to be an exclusive recitation ofthe contract terms, and points to the absence from the purchase order ofseveral key details of the agreement. Timberline argues, and the trialcourt and Court of Appeals agreed, that the purchase order did not preventthe terms of the license from becoming part of the contract or render thelimitation of remedies clause unenforceable. Whether the parties intend a written document to be a final expression ofthe terms of the agreement is a question of fact. Emrich v. Connell, 105Wn.2d 551, 556, 716 P.2d 863 (1986). In determining whether an agreementis integrated, ‘thecourt may consider evidence of negotiations and circumstances surroundingtheformation of the contract.’ Denny’s Restaurants, Inc. v. Security UnionTitle Ins. Co., 71 Wn. App. 194, 202, 859 P.2d 619 (1993) (citingRestatement (Second) of Contracts sec. 216 (1981)). ‘{I}f reasonable mindscan reach but one conclusion’ on an issue of fact, it may be determined onsummary judgment. Allen v. State, 118 Wn.2d 753, 760, 826 P.2d 200 (1992).RCW 62A.2-204(1) provides, ‘{a} contract for sale of goods may be made inany manner sufficient to show agreement, including conduct by both partieswhich recognizes the existence of such a contract.’ Whether the purchaseorder qualifies as a contract at all does not resolve the issue of whetherit is an integrated contract. Even if we assume the purchase order could,standing alone, constitute a complete contract under the U.C.C., such wasnot the case here. The language of the purchase order makes this clear.For example, the purchase order sets an hourly rate for Timberline’sprovision of ‘software support,’ but does not specify how many hours ofsupport Timberline would provide. The purchase order also states: ‘{a}tsome future date should Timberline upgrade ‘Bid Day’ to a windows version,M.A. Mortenson would be able to upgrade to this system with Timberlinecrediting existing software purchase toward that upgrade on a pro-ratedbasis to be determined later.’ Clerk’s Papers at 206 (emphasis added).Finally, the purchase order does not contain an integration clause. Thepresence of an integration clause ‘strongly supports a conclusion that theparties’ agreement was fully integrated . . . .’ Olsen Media v. EnergySciences, Inc., 32 Wn. App. 579, 584, 648 P.2d 493 (1982). Here, theabsence of such a clause further supports the conclusion that the purchaseorder was not the complete agreement between the parties. The trial courtand the Court of Appeals correctly determined the purchase order did notconstitute an integrated contract. Terms of the Contract Mortenson next argues even if the purchase order was not an integratedcontract, Timberline’s delivery of the license terms merely constituted arequest to add additional or different terms, which were never agreed uponby the parties. Mortenson claims under RCW 62A.2-207 7 the additionalterms did not become part of the contract because they were materialalterations. Timberline responds that the terms of the license were not arequest to add additional terms, but part of the contract between theparties. Timberline further argues that so-called ‘shrinkwrap’ softwarelicenses have been found enforceable by other courts, and that both tradeusage and course of dealing support enforcement in the present case.For its section 2-207 analysis, Mortenson relies on Step-Saver Data Sys.,Inc. v. Wyse Tech., 939 F.2d 91 (3d Cir. 1991). There, Step-Saver, a valueaddedretailer,8 placed telephone orders for software and confirmed with purchaseorders. The manufacturer then forwarded an invoice back to Step-Saver.The software later arrived with a license agreement printed on thepackaging. Step-Saver, 939 F.2d at 95-96. Finding the license ‘shouldhave been treated as a written confirmation containing additional terms,’the Third Circuit applied U.C.C. section 2-207 and held the warrantydisclaimer and limitation of remedies terms were not part of the parties’agreement because they were material alterations. Step-Saver, 939 F.2d at105-06. Mortenson claims Step-Saver is controlling, as ‘virtually everyelement of the transaction in the present case is mirrored in Step-Saver.’Br. of Appellant at 26. We disagree. First, Step-Saver did not involve the enforceability of a standard licenseagreement against an end user of the software, but instead involved itsapplicability to a value added retailer who simply included the software inan integrated system sold to the end user. In fact, in Step-Saver theparty contesting applicability of the licensing agreement had been assuredthe license did not apply to it at all. Step-Saver, 939 F.2d at 102. Suchis not the case here, as Mortenson was the end user of the Bid Analysissoftware and was never told the license agreement did not apply.Further, in Step-Saver the seller of the program twice asked the buyer tosign an agreement comparable to their disputed license agreement. Bothtimes the buyer refused, but the seller continued to make the softwareavailable. Step-Saver, 939 F.2d at 102-03. In contrast, Mortenson andTimberline had utilized a license agreement throughout Mortenson’s use ofthe Medallion and Precision Bid Analysis software. Given thesedistinctions, we find Step-Saver to be inapplicable to the present case. 9We conclude this is a case about contract formation, not contractalteration. As such, RCW 62A.2-204, and not RCW 62A.2-207, provides theproper framework for our analysis. RCW 62A.2-204 states: (1) A contract for sale of goods may be made in any manner sufficient toshow agreement, including conduct by both parties which recognizes theexistence of such a contract. (2) An agreement sufficient to constitute a contract for sale may be foundeven though the moment of its making is undetermined. (3) Even though one or more terms are left open a contract for sale doesnot fail for indefiniteness if the parties have intended to make a contractand there is a reasonably certain basis for giving an appropriate remedy. (Emphasis added.) Although no Washington case specifically addresses the type of contractformation at issue in this case, a series of recent cases from otherjurisdictions have analyzed shrinkwrap licenses under analogous statutes.See Brower v. Gateway 2000, Inc., 246 A.D.2d 246, 250-51, 676 N.Y.S.2d 569(1998); Hill v. Gateway 2000, Inc., 105 F.3d 1147 (7th Cir.), cert. denied,522 U.S. 808 (1997); ProCD, Inc. v. Zeidenberg, 86 F.3d 1447 (7th Cir.1996). In ProCD, which involved a retail purchase of software, the Seventh Circuitheld software shrinkwrap license agreements are a valid form of contractingunder Wisconsin’s version of U.C.C. section 2-204, and such agreements areenforceable unless objectionable under general contract law such as the lawof unconscionability. ProCD, 86 F.3d at 1449-52. The court stated,’{n}otice on the outside, terms on the inside, and a right to return thesoftware for a refund if the terms are unacceptable (a right that thelicense expressly extends), may be a means of doing business valuable tobuyers and sellers alike.’ ProCD, 86 F.3d at 1451. In Hill, the customer ordered a computer over the telephone and receivedthe computer in the mail, accompanied by a list of terms to govern if thecustomer did not return the product within 30 days. Hill, 105 F.3d at1148. Relying in part on ProCD, the court held the terms of the ‘accept-or-return’ agreement were effective, stating, ‘{c}ompetent adults are bound bysuch documents, read or unread.’ Hill, 105 F.3d at 1149 (emphasis added). Elaborating on its holding in ProCD, the court continued: The question in ProCD was not whether terms were added to a contract afterits formation, but how and when the contract was formed–in particular,whether a vendor may propose that a contract of sale be formed, not in thestore (or over the phone) with the payment of money or a general ‘send methe product,’ but after the customer has had a chance to inspect both theitem and the terms. ProCD answers ‘yes,’ for merchants and consumersalike. Hill, 105 F.3d at 1150 (emphasis added). Interpreting the same licensing agreement at issue in Hill, the New YorkSupreme Court, Appellate Division concluded shrinkwrap license termsdelivered following a mail order purchase were not proposed additions tothe contract, but part of the original agreement between the parties.Brower, 246 A.D.2d at 250-51. The court held U.C.C. section 2-207 did notapply because the contract was not formed until after the period to returnthe merchandise. Brower, 246 A.D.2d at 250.10 We find the approach of the ProCD, Hill, and Brower courts persuasiveand adopt it to guide our analysis under RCW 62A.2-204. We concludebecause RCW 62A.2-204 allows a contract to be formed ‘in any mannersufficient to show agreement . . . even though the moment of its making isundetermined,’ it allows the formation of ‘layered contracts’ similar tothose envisioned by ProCD, Hill, and Brower. See ProCD, 86 F.3d at 1452-53(holding shrinkwrap license agreement was a valid form of contracting underU.C.C. section 2-204). We, therefore, hold under RCW 62A.2-204 the termsof the license were part of the contract between Mortenson and Timberline,and Mortenson’s use of the software constituted its assent to theagreement, including the license terms. The terms of Timberline’s license were either set forth explicitly orreferenced in numerous locations. The terms were included within theshrinkwrap packaging of each copy of Precision Bid Analysis; they werepresent in the manuals accompanying the software; they were included withthe protection devices for the software, without which the software couldnot be used. The fact the software was licensed was also noted on theintroductory screen each time the software was used. Even acceptingMortenson’s contention it never saw the terms of the license, as we must doon summary judgment, it was not necessary for Mortenson to actually readthe agreement in order to be bound by it. See Yakima County FireProtection Dist. No. 12 v. City of Yakima, 122 Wn.2d 371, 389, 858 P.2d 245(1993) (citing Skagit State Bank v. Rasmussen, 109 Wn.2d 377, 381-84, 745P.2d 37 (1987)); Hill, 105 F.3d at 1148; Kaczmarek v. Microsoft Corp., 39F. Supp. 2d 974, 977 (N.D. Ill. 1999).11 Furthermore, the U.C.C. defines an ‘agreement’ as ‘the bargain of theparties in fact as found in their language or by implication from othercircumstances including course of dealing or usage of trade or course ofperformance . . . .’ RCW 62A.1-201(3) (emphasis added). Mortenson andTimberline had a course of dealing; Mortenson had purchased licensedsoftware from Timberline for years prior to its upgrade to Precision BidAnalysis. All Timberline software, including the prior version of BidAnalysis used by Mortenson since at least 1990, is distributed underlicense. Moreover, extensive testimony and exhibits before the trial courtdemonstrate an unquestioned use of such license agreements throughout thesoftware industry. Although Mortenson questioned the relevance of thisevidence, there is no evidence in the record to contradict it. While tradeusage is a question of fact, undisputed evidence of trade usage may beconsidered on summary judgment. Graaff v. Bakker Bros. of Idaho, Inc., 85Wn. App. 814, 818, 934 P.2d 1228 (1997). As the license was part of the contract between Mortenson and Timberline,its terms are enforceable unless ‘objectionable on grounds applicable tocontracts in general . . . .’ ProCD, 86 F.3d at 1449. Enforceability of Limitation of Remedies ClauseMortenson contends even if the limitation of remedies clause is part of itscontract with Timberline, the clause is unconscionable and, therefore,unenforceable. Limitations on consequential damages are generally valid under the U.C.C.unless they are unconscionable. RCW 62A.2-719(3). Whether a limitation onconsequential damages is unconscionable is a question of law. RCW 62A.2-302(1); American Nursery Prods., Inc. v. Indian Wells Orchards, 115 Wn.2d217, 222, 797 P.2d 477 (1990) (citing Schroeder v. Fageol Motors, Inc., 86Wn.2d 256, 262, 544 P.2d 20 (1975)). ‘Exclusionary clauses in purelycommercial transactions . . . are prima facie conscionable and the burdenof establishing unconscionability is on the party attacking it.’ AmericanNursery Prods., 115 Wn.2d at 222. If there is no threshold showing ofunconscionability, the issue may be determined on summary judgment. Nelsonv. McGoldrick, 127 Wn.2d 124, 132-33, 896 P.2d 1258 (1995). Washington recognizes two types of unconscionability–substantive andprocedural–which we will now address in turn. 1. Substantive Unconscionability. Mortenson asserts Timberline’s failure to inform it of the ‘defect’ in thesoftware prior to its purchase renders the licensing agreementsubstantively unconscionable. “Substantive unconscionability involves those cases where a clause or termin the contract is alleged to be one-sided or overly harsh . . . .”Nelson, 127 Wn.2d at 131 (quoting Schroeder, 86 Wn.2d at 260). “Shockingto the conscience’, ‘monstrously harsh’, and ‘exceedingly calloused’ areterms sometimes used to define substantive unconscionability.’ Nelson, 127Wn.2d at 131 (quoting Montgomery Ward & Co. v. Annuity Bd. of S. BaptistConvention, 16 Wn. App. 439, 444, 556 P.2d 552 (1976)). As an initial matter, it is questionable whether clauses excludingconsequential damages in a commercial contract can ever be substantivelyunconscionable. See American Nursery Prods., 115 Wn.2d at 237-38 (Utter,J., concurring) (citing Tacoma Boatbuilding Co. v. Delta Fishing Co., 28U.C.C. Rep. Serv. 26, 35 (W.D. Wash. 1980)). Even if the doctrine isapplicable, however, the clause here is conscionable because substantiveunconscionability does not address latent defects discovered after thecontracting process. RCWA 62A.2-302(1) & cmt. 1; American Nursery Prods.,115 Wn.2d at 237 (Utter, J., concurring). In Tacoma Boatbuilding, the Western District of Washington consideredwhether a contractual clause limiting consequential damages wassubstantively unconscionable under Washington law, where mechanicalproblems developed in several boat engines after the contracting process.Like Mortenson, the purchaser in Tacoma Boatbuilding argued because theproduct did not work properly, the limitation clause was unconscionable. The court rejected this theory: Comment 3 to {U.C.C.} sec.2-719 generally approves consequential damageexclusions as ‘merely an allocation of unknown or undeterminable risks.’Thus, the presence of latent defects in the goods cannot render theseclauses unconscionable. The need for certainty in risk-allocation isespecially compelling where, as here, the goods are experimental and theirperformance by nature less predictable. Tacoma Boatbuilding, 28 U.C.C. Rep. Serv. at 35 (citation omitted).We find the result in Tacoma Boatbuilding an accurate analysis ofWashington’s law of substantive unconscionability and adopt it here. In apurely commercial transaction, especially involving an innovative productsuch as software, the fact an unfortunate result occurs after thecontracting process does not render an otherwise standard limitation ofremedies clause substantively unconscionable. An example of the proper focus of the substantive unconscionabilitydoctrine is found in Brower v. Gateway 2000, Inc., 246 A.D.2d 246, 254, 676N.Y.S.2d 569 (1998). There, a shrinkwrap software license similar to thelicense in the present case included a mandatory arbitration clause, whichrequired the use of a French arbitration company, payment of an advance feeof $4,000 (half which was nonrefundable), significant travel fees borne bythe consumer, and payment of the loser’s attorney fees. Brower, 246 A.D.2dat 249. The Brower court found this clause substantively unconscionable. Brower, 246 A.D.2d at 254. In contrast, Timberline’s consequential damages clause, when examined atthe time the contract was formed, does not shock the conscience in themanner of the Brower mandatory arbitration clause; it is not substantivelyunconscionable. 2. Procedural Unconscionability. Mortenson also contends the licensing agreement is procedurallyunconscionable because ‘the license terms were never presented to Mortensonin a contractually-meaningful way.’ Supplemental Br. of Pet’r at 17.Procedural unconscionability has been described as the lack of a meaningfulchoice, considering all the circumstances surrounding the transactionincluding “{t}he manner in which the contract was entered,’ whether eachparty had ‘a reasonable opportunity to understand the terms of thecontract,’ and whether ‘the important terms {were} hidden in a maze of fineprint . . . .” Nelson, 127 Wn.2d at 131 (alterations in original) (quoting Schroeder, 86Wn.2d at 260). Examining the contracting process between the parties based on the abovefactors, we hold the clause to be procedurally conscionable. The clausewas not hidden in a maze of fine print. Nelson, 127 Wn.2d at 131. Thelicense was set forth in capital letters on each diskette pouch and on theinside cover of the instruction manuals. A license to use the protectiondevice was wrapped around each such device. The license was alsoreferenced in the opening screen of the software program. This gaveMortenson more than ample opportunity to read and understand the terms ofthe license. Mortenson is also not an inexperienced retail consumer, but anationwide construction contractor that has purchased licensed softwarefrom Timberline in the past. See Northwest Acceptance Corp. v. HescoConstr., Inc., 26 Wn. App. 823, 830-31, 614 P.2d 1302 (1980) (findingliquidated damages clause conscionable in part because parties werecommercially experienced).12 Unconscionability ‘was never intended as a vortex for elements of fairnessspecifically embodied in other Code provisions.’ Tacoma Boatbuilding, 28U.C.C. Rep. Serv. at 33. We find Mortenson’s unconscionability claimunpersuasive and, therefore, find the limitation of remedies clause to beenforceable. CONCLUSION Mortenson has failed to set forth any material issues of fact on theissue of contract formation, and has also failed to make a thresholdshowing of unconscionability sufficient to avoid summary judgment.We affirm the Court of Appeals, upholding the trial court’s order ofsummary judgment of dismissal and denial of the motions to vacate andamend. WE CONCUR: 1 Bid Analysis is designed for use by general contractors preparingconstruction bids. The program analyzes project requirements as well asbid information from subcontractors and finds the lowest cost combinationof subcontractors to carry out the required work. 2 Mortenson subsequently ordered a ninth copy of the software. 3 Items appearing in upper case in the original documents appear in uppercase in this opinion. 4 A protection device is a piece of hardware that must be affixed to acomputer in order to operate the Bid Analysis software; the program willnot operate without the device. Mortenson received one protection devicefor each copy of software it ordered. 5 Four months after filing its notice of appeal, Mortenson moved to vacatethe trial court judgment and amend its pleadings to include tort claims.The trial court denied these motions and the Court of Appeals affirmed.M.A. Mortenson Co., 93 Wn. App. at 837-39. While Mortenson argues in itssupplemental briefing that the Court of Appeals erred in affirming thetrial court’s denial of these motions, it fails to include this issue inits petition for review. As such, we decline to reach it. RAP 13.7(b). 6 In 1999 the National Conference of Commissioners on Uniform State Lawspromulgated the Uniform Computer Information Transactions Act (UCITA) tocover agreements to ‘create, modify, transfer, or license computerinformation or informational rights in computer information.’ UCITA sec.102(a)(12), U.L.A. (2000); see also UCITA sec. 103, U.L.A.(2000). The UCITA, formerly known as proposed U.C.C. Article 2B, wasapproved and recommended for enactment by the states in July 1999. 7RCW 62A.2-207 states: ‘(1) A definite and seasonable expression of acceptance or a writtenconfirmation which is sent within a reasonable time operates as anacceptance even though it states terms additional to or different fromthose offered or agreed upon, unless acceptance is expressly madeconditional on assent to the additional or different terms. ‘(2) The additional terms are to be construed as proposals for addition tothe contract. Between merchants such terms become part of the contractunless: ‘(a) the offer expressly limits acceptance to the terms of the offer;’(b) they materially alter it; or ‘(c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received. ‘(3) Conduct by both parties which recognizes the existence of a contractis sufficient to establish a contract for sale although the writings of theparties do not otherwise establish a contract. In such case the terms ofthe particular contract consist of those terms on which the writings of theparties agree, together with any supplementary terms incorporated under anyother provisions of this Title.’ 8A ‘value added retailer’ evaluates the needs of a particular group ofpotential computer users, compares those needs with the availabletechnology, and develops a package of hardware and software to satisfythose needs. Step-Saver, 939 F.2d at 93. 9 We also note the contract here, unlike the contract in Step-Saver, was not’between merchants’ because Mortenson does not deal in software. See RCW62A.2-104 (merchant is person who deals in or has particular skill withrespect to the kind of goods involved in the transaction). RCW 62A.2-207does not specify when additional terms become part of a contract involvinga nonmerchant. 10 The fact the approach utilized by the ProCD, Hill, and Brower courtsrepresents the overwhelming majority view on this issue is furtherdemonstrated by its adoption into the UCITA. See UCITA sec. 208 cmt. 3(Approved Official Draft), U.L.A. (2000) (noting intent to adopt therule in these cases). The UCITA embraces the theory of ‘layeredcontracting,’ which acknowledges while ‘some contracts are formed and theirterms fully defined at a single point in time, many transactions involve arolling or layered process. An agreement exists, but terms are clarifiedor created over time.’ UCITA sec. 208 cmt. 3 (Approved Official Draft).11 We note even if Mortenson’s Bellevue employees never saw a copy of thelicense terms, Mortenson does not dispute that additional copies of thesoftware were forwarded to its other offices. Even had Reich completed theentire installation process at the Bellevue office, he did not install thesoftware at Mortenson’s other offices. 12 Furthermore, we note a party defending a limitation on consequentialdamages ‘may prove the clause is conscionable regardless of the surroundingcircumstances if the general commercial setting indicates a prior course ofdealing or reasonable usage of trade as to the exclusionary clause.’ American Nursery Prods., 115 Wn.2d at 223 (emphasis added); see also Cox v.Lewiston Grain Growers, Inc., 86 Wn. App. 357, 369, 936 P.2d 1191, reviewdenied, 133 Wn.2d 1020 (1997). The same uncontradicted evidence of tradeusage and course of dealing noted in our analysis of contract formationsupports the conclusion that the clause is procedurally conscionable.
M. A. Mortenson Co., Inc. v. Timberline Software Corp. Supreme Court of the State of Washington Docket Number:67796-4 M. A. Mortenson Company, Inc. v. Timberline Software Corp. & Softworks Data Systems File Date: 05/04/2000 Oral Argument Date: 10/26/1999 Appeal from Superior Court,King County;95-2-31991-2 Honorable Phillip Hubbard, Judge. Authored by Charles W. Johnson Concurring: Richard P. Guy,Charles Z. Smith,Barbara A. Madsen,Philip A. Talmadge,Faith E Ireland,Visiting Judge Dissenting: Richard B. Sanders, Gerry L. Alexander Counsel for Petitioner(s):Bradley L. Powell,Oles Morrison Rinker & Baker Llp Catherine C. Clark, Williams & Williams Psc,Theodore Russell, Sheppad Mullin Richter & Hampton Llp, Four Embarcadero Ctr. Counsel for Respondent(s):Charles E. Peery, Peery Hiscock Pierson & Ryder, Michael E. Ricketts, Peery Hiscock Pierson Kingman & Peabody, Laura P. Knechtel, Michael P. GraceGroff & Murphy Pllc Amicus Curiae on behalf of Business Software alliance: Robert B. Mitchell Jr., Preston Gates & Ellis,Mark Wittow, Preston Gates & Ellis Amicus Curiae on behalf of Washington Softwarealliance: Robert B. Mitchell Jr.,Preston Gates & Ellis, Mark Wittow, Preston Gates & Ellis No. 67796-4 En Banc Filed May 4, 2000
