Contract Disclaimers and As Is Provisions

Contract disclaimers let parties to a contract rid themselves of certain responsibilities, while "as is" contract provisions typically put buyers on notice that they're stuck with any problems associated with the product or property they're purchasing. This article discusses the basics of disclaimers and as is provisions in contracts. (To learn more about your legal rights if something goes wrong with your contract, check out Nolo's Contract Disputes topic.)

What Are Disclaimers?

When a seller or manufacturer explicitly disavows responsibility for certain results, those statements are called disclaimers. Here's how you could encounter them: Suppose that you're watching an ad for a new drug, and it promises to cure dandruff, hair loss, bad breath and stained teeth. The ad sounds fantastic -- until it ends with a statement saying, "Your results may vary," or warning that the manufacturer won't be responsible if, say, your hair turns blue or your organs fail. The manufacturer has disclaimed any responsibility for unfortunate results.

Disclaimers are a way of distancing yourself from contractual or other legal obligations. Manufacturers use them as they do other types of exculpatory provisions -- such as indemnity clauses or limitations on liability provisions -- to minimize risks when the results of certain behavior are uncertain. For example, the parties might put a disclaimer in their contract giving up the right to seek consequential damages, because those damages can be difficult to predict and neither party wants to be on the hook later.

You can't disclaim everything. Some obligations cannot be disclaimed, because law and public policy don't allow people to avoid certain obligations. For example, a provision disclaiming a certain kind of warranty may be unenforceable. For that reason, you may need a lawyer's advice to determine which obligations may be disclaimed and which may not. (You can use Nolo's trusted Lawyer Directory to find and speak with an experienced contracts attorney near you.)

A disclaimer may also be required by contract. For example, a party that manufactures a product may require resellers to use a certain disclaimer on the product. Let's say a financial accounting firm licenses its website content to a tax-preparation website. As a condition of the license, wherever the information is posted, the tax website must include the following disclaimer: "We are providing financial information, not financial advice. If you need financial advice, you should seek guidance from an accounting professional." As with all disclaimers, statements like these might not be enforceable if they violate the law or public policy.

As Is Provisions in Contracts

A century ago, all purchases were as is. The buyer needed to seriously inspect every purchase before making it, because all sales were final. This age-old legal rule was known as caveat emptor: Let the buyer beware. But during the 20^th century, as consumer goods became more complicated and harder for regular persons to effectively inspect, laws were enacted requiring that goods and services be merchantable (in good condition and able to do the task for which they were sold). This requirement is known as the "implied warranty of merchantability."

However, the implied warranty does not apply when property is sold as is, and the as is buyer takes the goods in their current condition. Similarly, the implied warranty does not apply when any buyer, before entering into the contract, has examined the goods or has refused to examine them, as long as the claimed defects would have been revealed upon examination.

For more tips on getting your agreement in writing, read Nolo's article Contracts 101: Make a Legally Valid Contract. If you're looking for an A to Z guide to everything you need to know about contracts, get Nolo's new book Contracts: The Essential Business Desk Reference, by attorney Rich Stim.