Can An “As Is” Clause Protect Your Business? Maybe

The two words “as is,” seem to be popular with anybody selling a product, item or service. They seemingly insulate the seller from any liability, putting the entire onus of any defects or problems on the buyer or purchaser. However, there are limits to how far an “As Is” clause can protect your business, and you should be aware of those limits so that your business doesn’t end up in court.

What is an “As Is” Clause?

“As Is” clauses come in many forms. Some simply say the buyer takes the product with no warranties or guarantees. Others go farther, to say that no oral representations or promises will alter anything in writing, nor will they create any legally enforceable guarantees. Because Florida law presumes, in the absence of any writing to the contrary, that every item sold comes with some kind of warranty of fitness, an “As Is” clause can also free the seller from these statutory guarantees.

“As Is” clauses are also beneficial for sellers of items that the seller may not be very familiar with—think of a pawn shop operator, or a reseller, selling property that he or she has not personally tested out.

Problems WIth “As Is” Clauses

But “As Is” clauses are not foolproof. Like any contractual language, the wording of the “As Is” clause can cause problems.

For example, does the clause prevent the buyer from returning the item (or suing) for all defects, or just known, discoverable defects? Many transactions (like the sale of a business or a car) involve a lot of paperwork—what if a document signed has language that does create some kind of guarantee, promise or warranty? Does the “As Is” clause in one document override any implied guarantees contained in any other document being signed by the buyer?

When The Clause Can Be Weakened

“As Is” clauses also generally will not protect a seller from active fraud. In other words, if the seller knows of a defect, and actively conceals it, the seller may not be able to hide behind the clause for legal protection.

Even accidental concealment can void an “As Is” clause. For example, if someone sells a business and doesn’t disclose the company’s debts, even by accident, the fact the seller bought the business “As Is” will not protect the seller from a lawsuit. Florida has a very strong Deceptive Trade Practices Act that will override an “As Is” clause in these situations.

Actions taken outside the contract can also alter the strength of the clause. For example, if someone buys a car as is, but subsequently, the dealer charges for an inspection, that inspection (or similar actions by a seller) can weaken the strength of the “As Is” clause.

Let our West Palm Beach business litigation lawyers at Pike & Lustig, LLP, help you keep your business safe, or help you protect yourself if you have been cheated by another business. Call us at 561-291-8298 to get a consultation.

Resource:

leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0500-0599/0501/0501PARTIIContentsIndex.html

https://www.turnpikelaw.com/are-you-ready-for-a-business-breakup/