Also known as:U.C.C. § 2-316 · Uniform Commercial Code § 2-316 · UCC 2-316 · warranty disclaimer · exclusion of warranties · modification of warranties
Written by attorneys — see sources below.
A statutory rule permitting a seller to exclude all implied warranties by using expressions such as as is or with all faults that in common understanding call the buyer's attention to the exclusion and make plain that no implied warranty exists unless the circumstances indicate otherwise.
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How its tested
Common Examples
3
Surplus Tooling Sale With As Is Clause
Valley Flight sold used precision tooling to Bright Space under a written agreement that displayed the bold capitalized phrase TOOLING SOLD AS IS WITH ALL FAULTS directly above the signature lines. Bright Space later discovered that the tooling was worn beyond tolerances and could not meet production rates. The as is language called the buyer's attention to the exclusion of warranties and made plain that no implied warranty existed so the court granted summary judgment for Valley Flight.
Software License With Box Top Terms
ProCD sold software to Zeidenberg who purchased a consumer package containing a box top license that disclaimed all implied warranties. Zeidenberg used the software in a manner that violated the license terms and later claimed breach of the implied warranty of merchantability. The court held that the box top language operated as an effective disclaimer because it plainly notified the buyer that no implied warranties accompanied the sale.
ProCD, Inc. v. Zeidenberg86 F.3d 1447 (7th Cir. 1996)
ProCD, Inc. compiled information from more than 3,000 telephone directories into a computer database.
The database cost more than $10 million to compile and is expensive to keep current. ProCD sells a version of the database called SelectPhone on CD-ROM discs. The company sold the database to the general public for personal use at a low price of approximately $150 for the set of five discs while selling information to the trade for a higher price. Every box containing its consumer product declares that the software comes with restrictions stated in an enclosed license. This license is encoded on the CD-ROM disks as well as printed in the manual and appears on a user's screen every time the software runs. The license limits use of the application program and listings to noncommercial purposes.
Matthew Zeidenberg bought a consumer package of SelectPhone in 1994 from a retail outlet in Madison, Wisconsin. He formed Silken Mountain Web Services, Inc. to resell the information in the SelectPhone database. Zeidenberg purchased two additional SelectPhone packages, each with an updated version of the database. He made the latest information available over the World Wide Web for a price through his corporation.
ProCD filed this suit seeking an injunction against further dissemination that exceeds the rights specified in the licenses. The district court held the licenses ineffectual because their terms do not appear on the outside of the packages. The court added that the second and third licenses stand no different from the first because they might have been different.
Bloomfield Motors sold a new car to Henningsen under a contract that contained a clause disclaiming all implied warranties. The car suffered a steering defect that caused an accident shortly after delivery. The court refused to enforce the disclaimer because the circumstances including the consumer context and the seller's superior knowledge indicated that the parties did not intend a total elimination of quality assurances.
In May 1955, Claus H. Henningsen purchased a new 1955 Plymouth Plaza Club Sedan from Bloomfield Motors, Inc., an authorized De Soto and Plymouth dealer for Chrysler Corporation.
Mr. Henningsen intended the car as a Mother's Day gift for his wife, Helen Henningsen, and communicated that intention to the dealer. He alone signed a one-page printed purchase-order form. The reverse side contained, in fine six-point script type, a warranty clause limiting the manufacturer's obligation to replacement of defective parts within ninety days or four thousand miles and disclaiming all other warranties, express or implied. The front of the form contained two even smaller paragraphs directing attention to the back-side conditions. The form was a standardized document prepared by the manufacturer and used by all its dealers. No one called the fine-print provisions to Mr. Henningsen's attention, and he did not read them.
The car was delivered on May 9, 1955, after the dealer performed the items listed in Chrysler's New Car Preparation Service Guide. On May 19, 1955, while Mrs. Henningsen was driving north on Route 36 in Highlands, New Jersey, at twenty to twenty-two miles per hour on a smooth, paved highway, she heard a loud noise from the front of the car. The steering wheel spun in her hands and the vehicle veered sharply into a highway sign and brick wall. The car had been driven only 468 miles, had required no servicing, and had exhibited no unusual behavior before the accident.
An insurance appraiser with eleven years of experience examined the wrecked vehicle and concluded that something in the steering mechanism from the wheel down to the front wheels had broken or dropped off. Plaintiffs also presented expert testimony that the steering failure resulted from a latent manufacturing defect that could not have been discovered by reasonable inspection. The negligence counts against both defendants were dismissed at trial. The case was submitted to the jury solely on the implied-warranty claims.
The jury returned verdicts for both plaintiffs against Chrysler Corporation and Bloomfield Motors, Inc. Defendants appealed and plaintiffs cross-appealed from the dismissal of the negligence claim. The Supreme Court of New Jersey certified the matter directly before consideration by the Appellate Division.
When does an as is clause fail to exclude implied warranties under UCC § 2-316(3)(a)?
The clause fails when surrounding circumstances such as prior seller representations indicate that the parties did not intend a complete disclaimer. Courts examine pre-contract communications and the overall transactional context to determine whether the statutory qualification applies.
Supporting sources
Must an as is disclaimer mention merchantability to be effective?
No. Unlike subsection (2) the general as is formulation in subsection (3)(a) excludes both the implied warranty of merchantability and the implied warranty of fitness without requiring specific mention of merchantability.
Supporting sources
Does conspicuous presentation alone guarantee enforcement of a warranty disclaimer?
No. Conspicuousness satisfies one requirement but the disclaimer still must satisfy the common understanding test and must not be negated by circumstances indicating a contrary intention.
Supporting sources
How do courts treat additional warranty disclaimers added in a merchant confirmation?
A broad disclaimer of implied warranties is treated as a proposal that does not become part of the contract if it materially alters the bargain or if the other merchant objects within a reasonable time.
Supporting sources
…Step-Saver argued that the box-top
disclaimer
is either unconscionable or not in good faith. Second, Step-Saver argued that the
warranty disclaimer
was inconsistent with the express
warranties
made by TSL in the product specifications. Step-Saver argues that interpreting the form language of the license agreement to override the…