What does it take to disclaim implied warranties in a Delaware sale of goods?
To exclude or modify the implied warranty of merchantability the language must MENTION MERCHANTABILITY and, in a writing, must be conspicuous; to exclude or modify an implied warranty of fitness the exclusion must be in a writing and conspicuous, and language such as 'There are no warranties which extend beyond the description on the face hereof' suffices for fitness. Unless the circumstances indicate otherwise, expressions like 'as is' or 'with all faults' exclude all implied warranties; there is no implied warranty as to defects an examination ought to have revealed where the buyer examined or refused to examine the goods; and implied warranties can be excluded or modified by course of dealing, course of performance or usage of trade. Remedies for breach of warranty may be limited under §§ 2-718 and 2-719. Conspicuousness has a Code-wide default definition (§ 1-201(a), '[u]nless the context otherwise requires'), and Delaware has repealed the safe-harbour examples, so the test is a totality one: a term is conspicuous when it is so written, displayed or presented that, on the totality of the circumstances, a reasonable person against which it is to operate ought to have noticed it, and whether a term is conspicuous is a decision for the court, not the jury.
The trap
Delaware's § 2-316 also carries a subsection most drafters never look for: the implied warranties of merchantability and fitness do not apply at all to a contract for the sale of human blood, blood plasma or other human tissue or organs from a blood bank or reservoir, which the statute declares are not goods subject to sale but medical services. In ordinary commerce the trap is the familiar one: 'THE GOODS ARE SOLD AS IS' does the whole job under (3)(a), which applies '[n]otwithstanding subsection (2)' and asks only whether the circumstances indicate otherwise: conspicuousness is (2)'s requirement, not (3)(a)'s, while an elaborate but non-conspicuous paragraph that never says 'merchantability' does not, and an express warranty elsewhere in the document is construed as consistent with the disclaimer wherever reasonable, with the disclaimer inoperative to the extent that construction is unreasonable.
12 authorities
- statute6 Del. C. § 2-316enactment date not established
The words that state the rule
(2) Subject to subsection (3), to exclude or modify the implied warranty of merchantability or any part of it the language must mention merchantability and in case of a writing must be conspicuous, and to exclude or modify any implied warranty of fitness the exclusion must be by a writing and conspicuous.
- statute6 Del. C. § 2-316enactment date not established
The words that state the rule
(5) The implied warranties of merchantability and fitness shall not be applicable to a contract for the sale of human blood, blood plasma or other human tissue or organs from a blood bank or reservoir of such other tissues or organs. Such blood, blood plasma or tissue or organs shall not for the purposes of this Article be considered commodities or goods subject to sale or barter, but shall be considered as medical services.
- statute6 Del. C. § 2-316enactment date not established
The words that state the rule
(1) Words or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit warranty shall be construed wherever reasonable as consistent with each other; but subject to the provisions of this Article on parol or extrinsic evidence (Section 2-202) negation or limitation is inoperative to the extent that such construction is unreasonable.
- statute6 Del. C. § 2-316enactment date not established
The words that state the rule
Language to exclude all implied warranties of fitness is sufficient if it states, for example, that “There are no warranties which extend beyond the description on the face hereof.”
- statute6 Del. C. § 2-316enactment date not established
The words that state the rule
(3) Notwithstanding subsection (2) (a) unless the circumstances indicate otherwise, all implied warranties are excluded by expressions like “as is”, “with all faults” or other language which in common understanding calls the buyer’s attention to the exclusion of warranties and makes plain that there is no implied warranty; and (b) when the buyer before entering into the contract has examined the goods or the sample or model as fully as he or she desired or has refused to examine the goods there is no implied warranty with regard to defects which an examination ought in the circumstances to have revealed to him or her; and (c) an implied warranty can also be excluded or modified by course of dealing or course of performance or usage of trade.
- statute6 Del. C. § 2-316enactment date not established
The words that state the rule
(4) Remedies for breach of warranty can be limited in accordance with the provisions of this Article on liquidation or limitation of damages and on contractual modification of remedy (Sections 2-718 and 2-719).
- statute6 Del. C. § 1-201enactment date not established
The words that state the rule
(10) “Conspicuous”, with reference to a term, means so written, displayed, or presented that, based on the totality of the circumstances, 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. (A), (B) [Repealed.]
- statute6 Del. C. § 2-318enactment date not established
The words that state the rule
A seller’s warranty whether express or implied extends to any natural person who may reasonably be expected to use, consume or be affected by the goods and who is injured by breach of the warranty. A seller may not exclude or limit the operation of this section.
- statute6 Del. C. § 2-314enactment date not established
The words that state the rule
(1) Unless excluded or modified (Section 2-316), a warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind.
- statute6 Del. C. § 2-719enactment date not established
The words that state the rule
(2) Where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in this title. (3) Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable. Limitation of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable but limitation of damages where the loss is commercial is not.
- statute6 Del. C. § 1-201enactment date not established
The words that state the rule
(a) Unless the context otherwise requires, words or phrases defined in this section, or in the additional definitions contained in other articles of the Uniform Commercial Code that apply to particular articles or parts thereof, have the meanings stated. (b) Subject to definitions contained in other articles of the Uniform Commercial Code that apply to particular articles or parts thereof:
- statute6 Del. C. § 2-102enactment date not established
The words that state the rule
(1) Unless the context otherwise requires, and except as provided in subsection (3), this Article applies to transactions in goods and, in the case of a hybrid transaction, it applies to the extent provided in subsection (2). (2) In a hybrid transaction: (a) If the sale-of-goods aspects do not predominate, only the provisions of this Article which relate primarily to the sale-of-goods aspects of the transaction apply, and the provisions that relate primarily to the transaction as a whole do not apply. (b) If the sale-of-goods aspects predominate, this Article applies to the transaction but does not preclude application in appropriate circumstances of other law to aspects of the transaction which do not relate to the sale of goods.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.