Technically, the UCC § 2-316 says that certain disclaimers must be conspicuous and other disclaimers possibly do not. However, laws such as these end up in courts, where their judicial tasks include “interpreting” such laws. Another common example is the Second Amendment which says we have certain “textual” rights:
A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.
Yet, this right to “keep and bear” is regularly infringed upon as a result of court (interpretations) rulings: https://mikebrandlyauctioneer.wordpress.com/2018/03/22/firearms-guaranteed-and-not-infringed/.
Not surprisingly, the “textual” words of the UCC § 2-316 have been interpreted by courts. While these courts have disagreed if “conspicuous” can be applied to the UCC § 2-316 (3), none have held a conspicuous “as is” disclaimer to be ineffective.
However, have any courts held an “as is” disclaimer that wasn’t conspicuous to be ineffective? Indeed, for example, in this case from 1970 titled Gindy Mfg. Corp. v. CARDINALE TRUCK. CORP.,268 A.2d 45 (N.J. Super. Ct. App. Div. 1970) this Court said in part:
It does not make sense to require conspicuous language when a warranty is disclaimed by use of the words “merchantability” or “fitness” and not when a term like “as is” is used to accomplish the same result. It serves no intelligible design to protect buyers by conspicuous language when the term “merchantability” is used, but to allow an effective disclaimer when the term “as is” is buried in fine print. Nor does it make sense to require conspicuous language to disclaim the implied warranties of merchantability and fitness and not impose a similar requirement to disclaim other implied warranties that arise by course of dealing or usage of trade.
We’ll probably hear someone say, “Well, there have been cases where “as is” didn’t have to be conspicuous and other cases where “as is” had to be … so there’s no consensus.” Again, there have been no cases — and might never be — where a conspicuous “as is” disclaimer (by itself) was held to be ineffective.
The UCC § 1-201 defines conspicuous as:
With reference to a term, means so written, displayed, or presented that a reasonable person against which it is to operate ought to have noticed it. Whether a term is “conspicuous” or not is a decision for the court. Conspicuous terms include the following: (A) a heading in capitals equal to or greater in size than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same or lesser size; and (B) language in the body of a record or display in larger type than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same size, or set off from surrounding text of the same size by symbols or other marks that call attention to the language.
To augment this above case, the actual [textual] words in the UCC § 2-316 (3) (a) in regard to “as is” disclaimers say in part “… calls the buyers attention to the exclusion of warranties and makes plain that …” suggests to me that if it’s going to call the buyer’s attention and make plain — that “conspicuous” would be a good standard to use.
Further, you may see that “as is” is not capitalized or made necessarily conspicuous in the text of the UCC § 2-316 (3) (a) but the words “merchantability” nor “fitness” as noted in the UCC § 2-316 (2) are not necessarily conspicuous either, although these terms when used must be conspicuous if/and in writing.
Importantly, we noted that bidding an auction doesn’t merely involve one seller and one known buyer — and that it would appear obvious any disclaimers would essentially have to speak to the so-called least knowledgeable and seasoned bidder: https://mikebrandlyauctioneer.wordpress.com/2021/09/08/as-is-and-whos-the-buyer/.
The take-home seems to me to be clear. Your disclaimers regarding implied warranties should be in writing and be conspicuous as in larger print, bold, italic, different color, etc. And even if you disagree, why is this a bad idea? Why are you desiring your bidders to not see your disclaimers?
Mike Brandly, Auctioneer, CAI, CAS, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, RES Auction Services, and Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College, Executive Director of The Ohio Auction School, and an Instructor at the National Auctioneers Association’s Designation Academy and Western College of Auctioneering. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by The Supreme Court of Ohio for attorney education.
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