Implied Warranties and Disclaimers

Questions on implied warranties and how each type of implied warranty may be disclaimed show up often on the MBE. As such, it's good to understand this topic well.

The first of the implied warranties is the warranty of merchantability. Implied in every contract for a sale by a merchant who deals in goods of the kind sold is a warranty that the goods are merchantable. And to be merchantable, the goods must be fit for the ordinary purpose for which the goods are used. 

Also important is the implied warranty of fitness for a particular purpose. This warranty will be be implied whenever any seller (merchant or non-merchant) has reason to know of the particular purpose for which the goods are to be used and that the buyer is relying on the seller's skill and judgment to select suitable goods. 

Importantly, it makes no difference that the seller did not know of the defect that breaches either of these implied warranties, nor does it matter that the seller could not have discovered it. Implied warranties do not look towards fault; they are an absolute liability imposed on sellers!

Both the implied warranty of merchantability and the implied warranty of fitness for a particular purpose may be disclaimed. These warranties are disclaimed by either specific disclaimers or general disclaimers.  To disclaim the warranty of merchantability with a specific disclaimer, the word "merchantability" must be mentioned within the disclaimer. And if this disclaimer is in writing, the disclaimer must be conspicuous such that a reasonable person against whom it is to operate ought to have noticed it. 

Unlike the optional writing to specifically disclaim a warranty of merchantability, to specifically disclaim the warranty of fitness for a particular purpose requires a conspicuous writing.

More general disclaimers are allowable for both the warranty of merchantability and the warranty of fitness for a particular purpose. One such disclaimer is an "as is" clause. These clauses are valid if they call to the buyer's attention that there are no implied warranties. The words "as is" need not appear; "with all fault" or other common expressions will suffice. Although these need not be conspicuous, they shouldn't be hidden in the fine print. 

Another general disclaimer to consider involves the ability of the buyer to examine the goods. If the buyer before entering into the contract has examined the goods or a sample of the goods as fully as the buyer has desired to do so or if the buyer has been given the option to examine and has refused to do so, then there is no implied warranty as to any defect that a reasonable examination would have revealed. In other words, the buyer won't benefit from his own mistake.

Lastly, implied warranties may be disclaimed by the course of dealing, course of performance between the parties, and by usage of trade. Look towards the past to determine whether the parties (or the trade in which the parties are dealing) have chosen to ignore these warranties consistently. If so, they may forever lose the ability to rely on them.