Using “As-Is” Clauses in Your Contracts

If you’re selling a product and want nothing to do with ensuring the product does what it’s supposed to do, one easy way to wash your hands of potential liability is through an as-is clause. But those two worlds don’t solve all legal problems, and you can still be on the hook if something goes wrong with something you sell, even if the buyer takes whatever is being purchased “as-is.”

What Does it Mean or Do?

As-is generally means that you as a seller are disclaiming any warranties that there may be on the product. That includes any written warranties, but it also includes any warranties that are implied at law, even in the absence of a written agreement.

Many people don’t know that there are implied warranties in everything that we sell, warranting that the product acts and does what it is supposed to do. To avoid having any liability if the product doesn’t meet this expectation, an as-is clause can be very helpful.

As-is clauses can also disclaim anything that someone said to you before the sale of a product, to some extent.

So, for example, if someone promises that a vehicle will run just fine, and you buy it, and it doesn’t run, you aren’t bound by your promise that the car would run, if there was an as-is clause in the transaction. The as-is clause “wipes out” anything that was previously said, warrantied, or promised (assuming that the as-is clause was clearly disclosed to the buyer).

Not an Excuse for Fraud

But you cannot abuse an as-is clause, or use it as an excuse to defraud someone. Knowingly defrauding someone is a separate tort from a breach of contract. As such, while the as-is clause wipes out any contractual promises or warranties, it does not affect the tort of fraud, or misrepresentation, or other intentional act by the seller meant to deceive the buyer.

So, for example, in the car example above, if the seller of the car knows that the car doesn’t run, and promises that it will run, and then you buy the car with an as-is clause, that clause won’t avoid the fact that the seller knew about the car’s problems, and lied about it.

Make it Enforceable

To ensure that your as-is clause is enforceable, you want to ensure that the buyer has had the chance to see and inspect the property being purchased before the purchase. Buyers who do not get the chance to see or inspect whatever is being purchased, have an open door to accuse you of fraud.

As-is clauses should be clear, and should have some way of differentiating the language from the rest of the contract. Never hide or obscure as-is language in an agreement.

You can also have a hybrid as-is clause. This is where some warranties or promises are written into a contract, but beyond whatever is specifically written or promised, the property is being purchased as-is.

Contract problem? Call the West Palm Beach business litigation lawyers at Pike & Lustig today.

Sources:

afterpattern.com/clauses/as-is-purchase

law.justia.com/cases/federal/appellate-courts/ca11/15-10713/15-10713-2017-02-24.html