Does our 'AS IS, NO WARRANTIES' language actually disclaim the implied warranties in a New York sale of goods?
Under subdivision (2), as the Court of Appeals quoted it in pertinent part in Velez (the quotation opens mid-sentence, at 'to exclude or modify', so whatever the subdivision says ahead of those words is not set out), to exclude or modify the implied warranty of merchantability of any part of it 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 by a writing and conspicuous, and language excluding 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.' The provision is obviously addressed to the language and form to be used if any exclusion of warranties is to be effective, and the Court added that neither this section nor any other section of the code undertakes to specify who shall and who shall not be bound by an exclusion that meets it.
The trap
The New York trap here is evidentiary as much as doctrinal: the New York statutes located for this research contain only five UCC sections and NONE from article 2, so the operative text here is verified only through the Court of Appeals' own quotation of § 2-316(2) in Velez, and the conspicuousness standard it cross-refers to (UCC 1-201(10)) is not quoted in any authority listed here. On the doctrine, the two sub-traps are that the disclaimer must use the word 'merchantability' ('as is' alone is governed by the separate § 2-316(3) rule, which no authority listed here quotes), and that even a facially valid disclaimer is a defence between the contracting parties and does not by itself answer a claim by an injured non-party, which is what Velez itself was about: the invoice there said that 'The purchaser shall be deemed to have accepted these goods as is, the seller having made no representations or warranties whatsoever with respect to their quality, fitness for use, or in any other regard thereto', the text of that disclaimer was printed in the smallest type used on the invoice, the trial court held the conspicuousness requirements were not met while the Appellate Division majority held they were, the Court of Appeals assumed without deciding, 'for purposes of the present disposition', that the waiver met them, and then held that the injured workmen 'were complete strangers to the contract' and were not bound by the terms of the contract between their employer and the lumber company; the order of the Appellate Division was nonetheless reversed and the case remitted for a new trial.
4 authorities
The words that state the rule
There remains also the question of what effect if any shall be given the disclaimer and waiver of warranty printed on the lumber company’s invoice. For purposes of the present disposition we assume, without deciding, that the waiver here involved, so far as size and style of print, location, etc., met the requirements of section 1-201 (subd. [10]) of the Uniform Commercial Code as “ conspicuous ”. Subdivision (2) of section 2-316 of the Uniform Commercial Code in pertinent part provides: “ to exclude or modify the implied warranty of merchantability of 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. 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. ’ ” This provision is obviously addressed to the language and form to be used if any exclusion of warranties is to be effective. The section does not undertake, nor does any other section of the code undertake, to specify who shall and who shall not be bound by an exclusion of warranties which meets the requirements of section 2-316.
The words that state the rule
It bears in large capital letters the legend “ NO CLAIMS ALLOWED UNLESS MADE IMMEDIATELY AFTER. DELIVERY ” (underscored words in original). Immediately below this legend appeared the following: “ NOTE — The purchaser shall be deemed to have accepted these goods as is, the seller having made no representations or warranties whatsoever with respect to their quality, fitness for use, or in any other regard thereto.” The word “ NOTE ” was printed in the largest type used in the body of the invoice, but the text of the disclaimer is printed in the smallest type used on the invoice.
The words that state the rule
The trial court had held that the requirements of the Uniform Commercial Code (§ 2-316, subd. [2] and § 1-201, subd. [10]) were not met and accordingly did not reach the question as to whether, had they been met, the disclaimer would have been valid against the purchaser’s employees. The majority at the Appellate Division, on the other hand, held that the requirements of the code had been met on the facts of this case and that the effect of the disclaimer extended to plaintiffs.
The words that state the rule
In this case, however, we find no basis for holding that these plaintiffs should be barred from recovery by reason of the imprint of the exclusion of warranties legend on the invoice in this case. Plaintiffs were complete strangers to the contract; there is no evidence that either of them ever saw the invoice in question or knew of its contents. No authorities or rationale are tendered to support the extension of the disclaimer to plaintiffs with reference to claims predicated on strict products liability. We agree with the position of the dissenters at the Appellate Division that these plaintiffs were not bound by the terms of the contract between their employer and defendant lumber company. We see no necessity to labor the point that, in the absence of special circumstances not present here, buyer and seller cannot contract to limit the seller’s exposure under strict products liability to an innocent user or bystander. The order of the Appellate Division must be reversed and the case remitted for a new trial.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.