One of the most common things you will see in automobile purchase agreements is the statement that there are "No Warranties – Express or Implied." The problem is that a seller cannot disclaim an express warranty. Every car sold today in the U.S. will come with express warranties, despite this false disclaimer.
Anyone who has ever bought a car from a dealer has seen a purchase agreement smothered by boilerplate language. Not everyone reads these documents which is a shame, since they often address the buyer's legal rights. Here is an example I grabbed from a file sitting on my desk.
You will notice the "AS-IS" but see how it is followed by disclaimers of "all warranties, express or implied." As-is disclaims the implied warranty of merchantability so why disclaim it again? And they are disclaiming express warranties too? This type of language confuses a lot of people. And much of that confusion is sown by car sellers who want the waters to be muddied. Many car buyers will later see this language and assume they have no cause of action against the seller because of it.
This type of case is not litigated often, primarily because the amount of money at stake in a used car sale wouldn't make it cost-effective to hire an attorney. But, there was a recent non-car case which illustrates this point beautifully. For our purposes, be aware that you can cross out the word "helicopter" and write in "car" and get the same result with these facts. This is because this area of the law comes from the Uniform Commercial Code which governs the sale of goods. Goods can be cars, helicopters, sewing machines and so on. Bought a defective sewing machine? The UCC applies.
In 2012, a man named Perry Luig agreed to sell his Bell helicopter to North Bay Enterprises. They struck a bargain and the contract contained two interesting clauses. The first was that the helicopter would be delivered with a "current Certificate of Airworthiness." The second clause that mattered said, "At the time of delivery Purchaser agrees to accept the Aircraft in an 'as is where is' condition. (NO WARRANTY.)" Notice that it said both "as is" and "NO WARRANTY" in nice capital letters, so no one could miss it.
Luig delivered the helicopter to North Bay and it was inspected. The helicopter appeared to be in perfect operating condition for a device that was more than half a century old. But it didn't have a current airworthiness certificate. North Bay indicated that it would be happy to take the helicopter if Luig provided the certificate. Luig pointed to the "as is" language and told North Bay to get lost. In legal terms, that meant a Federal judge would explain how this all shook out.
The judge noted that "as-is" merely meant there was no implied warranty of merchantability. But the seller could not disclaim an express warranty. To allow it to do so would be nonsensical. Express warranties are made by the seller at the time of the sale: How could the seller both make and disclaim a warranty in the same transaction? Short answer: They can't. ("[U]se of the two words 'as-is' has never been held to automatically bar an action on an express warranty.") And here, the promise to deliver the helicopter with the certificate was an express warranty.
So, the court said North Bay would be compensated for its damages: The amount of money it would take to get the airworthiness certificate for the helicopter.
The same is true with cars. If a car seller could "disclaim" an express warranty, they could deliver a different car to you than the one described in the purchase agreement. For example, there are four express warranties in the snippet below. Can you find them? (Yes, I lopped a couple digits off of the VIN here but the original has all 17.)
In practical terms this means that you need to be aware what "As is" means – and what it does not. If you see the language purportedly disclaiming "all express warranties," know that you can ignore it. It's nonsense, inserted by an over-reaching car dealer. And as you negotiate, whenever the seller tells you anything specific about the car, ask that the statement be included on the purchase agreement. The transmission is new? Write it down. The vehicle is a "one-owner" car? Write it down. The car has never been in an accident? Yes, write it down.
Of course, many car sellers will tell you they cannot write these things down on the purchase agreement. Why? They'll make something up. Because they know that if they write the term down on the agreement, it becomes enforceable, despite the nonsensical "No express warranties" language. And why do they keep using that language when it makes no sense, legally? Because they know it confuses people and confusing car buyers is in their best interest.
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Steve Lehto has been practicing law for 23 years, almost exclusively in consumer protection and Michigan lemon law. He wrote The Lemon Law Bible and Chrysler's Turbine Car: The Rise and Fall of Detroit's Coolest Creation.
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