Contracts: Contract Terms: Limitations on Warranty Liability under A2

  • Limitations on Warranty Liability in Sales of Goods
    • A SELLER can disclaim implied warranties, but not express warranties.
      • A contract for the sale of a computer provides that “all parts are guaranteed for 2 years” [express warranty]. It also provides that “all warranties are disclaimed. The express warranty survives. A seller cannot disclaim an express warranty.
      • A contract provides for the sale of the computer “as is.” There is no other statement in the contract about quality. Are there any implied warranties under this contract? No. S can disclaim all implied warranties by using the words, “as is” or “with all faults.”
      • A contract provides that there are “NO IMPLIED WARRANTIES OF FITNESS OR MERCHANTABILITY,” instead of using the phrase “as is.” Any implied warranties? No. The disclaimer is effective because it is conspicuous—likely to draw the attention of a reasonable person.
        • In order to be enforceable, a disclaimer must be conspicuous, and must mention “merchantability,” if S wants to disclaim that.
    • A SELLER can limit a buyer’s remedies for breach of any warranty if the limitation is not unconscionable. However, with consumer goods, limiting a buyer’s remedies for personal injury is presumed unconscionable.