Disclaimers and As-Is Provisions in Contracts

A contract's parties can attempt to assign risks and minimize responsibility.

Contract disclaimers allow contract parties to absolve themselves of certain obligations, but "as is" contract stipulations often warn buyers that they will be responsible for any faults with the product or property they are purchasing. This article covers the fundamentals of disclaimers and contract provisions

What Are Disclaimers?

Disclaimers are statements in which a vendor or manufacturer expressly disclaims responsibility for specific outcomes. Here's how you might come across them: Assume you're seeing a commercial for a new treatment that claims to treat dandruff, hair loss, foul breath, and discoloured teeth. The commercial sounds great until it says, "Your results may vary," or that the maker isn't responsible if, for example, your hair turns blue or your organs fail. The manufacturer has denied any responsibility for the unfavorable outcomes.

Disclaimers are a technique of separating yourself from contractual or other legal responsibilities. Manufacturers employ them, along with other forms of exculpatory measures like indemnity agreements and liability limitations, to reduce risks when the outcomes of specific behaviors are unknown. Because consequential damages can be difficult to forecast and neither party wants to be on the hook afterwards, the parties may include a disclaimer in their contract giving up the right to seek them.

You can't claim to know everything. Some duties are unavoidable due to the fact that they are not allowed to be avoided by law or public policy. A provision disclaiming a certain type of warranty, for example, may be unenforceable. As a result, you might require legal guidance to figure out which duties can be disclaimed and which can't.

A contract may also require a disclaimer. A manufacturer of a product, for example, may force resellers to include a specific disclaimer on the product. Assume that a financial accounting business licenses the material of its website to a tax-preparation website. The tax website must display the following disclaimer whenever the material is uploaded as a condition of the license: "We're giving you financial data, not financial advice. If you require financial assistance, you should consult with an accountant." Statements like these, like all disclaimers, may be unenforceable if they contravene the law or public policy.

Contractual Provisions As Is

All purchases were made as-is a century ago. Because all sales were final, the buyer was required to thoroughly check each purchase before making it. Caveat emptor was a long-standing legal principle that stated, "Let the buyer beware." However, as consumer goods became more intricate and difficult for ordinary people to inspect properly during the twentieth century, rules demanding that goods and services be merchantable were adopted (in good condition and able to do the task for which they were sold). The "implied warranty of merchantability" is the term for this obligation.

When property is offered "as is," the implied warranty does not apply, and the customer accepts the products in their current state. Similarly, the implicit warranty does not apply if the buyer has examined or refused to examine the products before entering into the contract, as long as the claimed faults would have been exposed upon examination.

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