The Legal Limits of Disclaiming Warranties

Introduction

Businesses across industries—e-commerce platforms, AI and software companies, manufacturers, service providers, and countless other commercial entities—often include contractual provisions intended to disclaim or limit warranties. These disclaimers may target both express and implied warranties, addressing everything from product performance to suitability for a particular purpose. The key question is: How far can a business legally go in disclaiming warranties before a court rules these disclaimers invalid or unenforceable? Equally vital is understanding when a plaintiff can prevail in a lawsuit, even after signing agreements containing such disclaimers.

This educational post provides a broad, in-depth exploration of disclaimers of warranties under U.S. federal law, California state law, and certain general principles widely adopted across multiple jurisdictions. Although the law inevitably varies by state, many of the foundational principles about disclaimers, unconscionability, and statutory regulation remain consistent.

Below is a deep dive designed to cover:

• Major legal sources governing disclaimers of warranties.
• Applicable California statutes and doctrines.
• Federal consumer protection statutes relevant to warranty disclaimers.
• Requirements for valid disclaimers of express and implied warranties.
• Practical considerations for e-commerce, SaaS, AI-based products, and other technology-related businesses.
• Circumstances under which disclaimers may be voided or limited, enabling plaintiffs to overcome them in litigation.
• Case law examples and references to help illustrate the legal boundaries.

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Understanding Warranties and Their Disclaimers

What Is a Warranty?

A “warranty” is an assurance or guarantee by one party (often the seller) to another (often the buyer or end user) concerning the condition, quality, or characteristics of goods or services. Warranties provide a basis for legal recourse if the goods or services do not live up to the stated standards. Broadly speaking, warranties can be either express (explicitly stated by the seller) or implied (arising by operation of law, such as the implied warranty of merchantability and implied warranty of fitness for a particular purpose).

Overview of Express Versus Implied Warranties

Express warranties arise when a seller makes a specific affirmation, promise, or description of the goods or services. Such a warranty can be found in the text of a contract, a product label, a marketing brochure, or even in statements made in pitch meetings. A typical express warranty states something like, “This software will run at 99.9% uptime,” or “This product contains 99% organic ingredients.”

Implied warranties, on the other hand, arise from operation of law, not from explicit statements by the seller. Under the Uniform Commercial Code (“UCC”)—adopted in some form by every U.S. state—two common implied warranties are:

1. Implied Warranty of Merchantability (UCC § 2-314): The product (or goods) must be of fair or average quality and fit for the ordinary purposes for which such goods are used.
2. Implied Warranty of Fitness for a Particular Purpose (UCC § 2-315): When a seller knows or has reason to know of a particular need or purpose, and the buyer is relying on the seller’s expertise to furnish suitable goods, the seller is implicitly warranting that the goods will fulfill that specific need.

Why Disclaim Warranties?

Companies often seek to disclaim or limit warranties to mitigate risk. The disclaimers can:

• Limit financial exposure by capping or excluding damages.
• Clarify that the buyer assumes certain risks if the goods or services fail.
• Avoid inadvertently creating broad express or implied warranties that significantly expand liability.

However, disclaiming warranties must comply with legal and regulatory mandates. A disclaiming party cannot simply place “NO WARRANTIES WHATSOEVER” in a contract and escape liability for defects under all circumstances.

Sources of Law Governing Disclaimers

1. Federal statutes that govern warranty disclaimers in consumer transactions. Chief among these is the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et seq.
2. California state law and analogous state law in other jurisdictions. In California, disclaimers of warranties often implicate:
   • California Commercial Code § 2316 (mirroring UCC § 2-316).
   • Consumer protection statutes such as the Song-Beverly Consumer Warranty Act, Cal. Civil Code § 1790 et seq.
3. Common law principles such as unconscionability, contract interpretation, and public policy considerations.
4. General adoption of the UCC across states, though subject to local variations. Where references are made in this post to UCC provisions, it is implied that each state’s version of the code may include variations or interpretive nuances.

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Federal Framework: The Magnuson-Moss Warranty Act

Purpose and Applicability

The Magnuson-Moss Warranty Act, found at 15 U.S.C. § 2301 et seq., is a federal law that governs written warranties on consumer products. While it does not necessarily override every state law principle, it sets minimum requirements for warranties offered to consumers. It requires that if a written warranty is provided, it must be labeled as either “full” or “limited,” and the warrantor must follow certain disclosure and remedy procedures.

Key points:

• The Act applies only to consumer products, defined generally as tangible personal property normally used for personal, family, or household purposes.
• The Act contains provisions meant to prevent deceptive warranty disclaimers.
• The Act is relevant for disclaimers because a business cannot disclaim implied warranties entirely if it provides a written warranty, but it can limit implied warranties to the duration of an express warranty, so long as it does so conspicuously. See 15 U.S.C. § 2308(b).

Effect on Disclaimers

Where the Magnuson-Moss Warranty Act applies, a business’s ability to disclaim implied warranties is curtailed if the business chooses to give a written warranty. Section 2308(a) explicitly prohibits disclaimers of implied warranties if a seller provides any written warranty to a consumer. Section 2308(b) goes on to permit limiting (rather than completely disclaiming) the duration of implied warranties to the duration of the express warranty, provided it is set forth clearly and conspicuously.

Practical Impact:

• If a business provides a “full” or “limited” written warranty in a consumer transaction, disclaimers of implied warranties are heavily restricted.
• If no written warranty is provided, disclaimers remain subject to state law (for instance, the UCC, state consumer protection statutes, and so on).
• The disclaimers must be conspicuous and consistent with the rest of the warranty terms.

Enforcement Mechanisms Under Federal Law

Consumers who have been harmed by questionable disclaimers may file suit under federal law for violations of the Act. In some cases, attorneys’ fees may be awarded to a prevailing consumer. Magnuson-Moss effectively prevents the use of disclaimers that are misleading or that circumvent mandatory warranty obligations in consumer product transactions.

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California Commercial Code and General UCC Principles

California Commercial Code § 2316

California has adopted sections of the Uniform Commercial Code, including the disclaimers provision in California Commercial Code § 2316 (mirroring UCC § 2-316). This statute sets forth how parties may disclaim or modify express and implied warranties.

Key highlights from Cal. Com. Code § 2316:

1. Express warranties: If a seller makes an affirmation of fact or description relating to goods, it creates an express warranty. A disclaimer that contradicts such an express warranty is generally unenforceable.
2. Implied warranty of merchantability: To disclaim or modify it, the language must mention “merchantability” and, if in writing, be conspicuous.
3. Implied warranty of fitness: This warranty may be disclaimed or modified only by writing, and the disclaimer must be conspicuous and use clear language, such as “THERE ARE NO WARRANTIES WHICH EXTEND BEYOND THE DESCRIPTION ON THE FACE HEREOF.”
4. Conspicuousness: Defined in Cal. Com. Code § 1201(b)(10), “conspicuous” typically means a heading in uppercase, bold, or contrasting color that would draw a reasonable person’s attention.

Similar disclaimers exist in every state’s version of UCC § 2-316. Many states require disclaimers to include the words “as is” or “with all faults” to be enforceable, particularly for disclaimers of implied warranties.

“As Is” or “With All Faults” Clauses

A popular method for disclaiming implied warranties is including “as is” or “with all faults” language. For instance, a contract might read: “The product is sold ‘AS IS’ and ‘WITH ALL FAULTS,’ and Seller disclaims all warranties, express or implied.” If properly presented, these disclaimers can be effective, but courts still require that they be conspicuous and not conflict with any express warranties offered elsewhere in the agreement.

Additionally, disclaimers that run contrary to public policy—such as disclaimers for fraudulent conduct or disclaimers aimed at waiving statutory protections in consumer transactions—will be struck down. See, e.g., Tunkl v. Regents of Univ. of Cal., 60 Cal.2d 92 (1963), which, although not directly about disclaimers of warranties, outlines California’s strong public policy stance limiting disclaimers in certain high-stakes contexts.

Case Law Illustrations in California

1. Seely v. White Motor Co., 63 Cal.2d 9 (1965). Although focusing on the economic loss rule in product liability, the court recognized a clear line between disclaimers for purely economic losses in contract law and disclaimers that might hinder claims for personal injury or property damage.
2. Hauter v. Zogarts, 14 Cal.3d 104 (1975). Dealt with disclaimers in the context of an express warranty claim. The court underscored that disclaimers contradicting a specific representation about product performance are invalid when they conflict with the express warranty.
3. FCA US LLC v. Superior Court, 51 Cal.App.5th 1069 (2020). Although dealing with automotive warranties under the Song-Beverly Act, the reasoning underscores that disclaimers cannot override statutory warranty protections for consumers in many scenarios.

These cases indicate California courts pay significant attention to whether disclaimers directly conflict with express warranties, appear inconspicuous to the average consumer, or attempt to circumvent mandatory consumer protection statutes.

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Enforceability Requirements: Conspicuousness and Clear Language

The Conspicuousness Requirement

Courts place strong emphasis on the notion that disclaimers must be clear and conspicuous. Under the UCC (including California’s version), a disclaimer is deemed conspicuous if it is written so that “a reasonable person against whom it is to operate ought to have noticed it.” Typical approaches to conspicuousness include:

• Using bold, capitalized text (e.g., “DISCLAIMER OF WARRANTY”).
• Placing the disclaimer on a separate line or paragraph with a heading in large, bold print.
• Using color contrast or a different font size to draw the reader’s eye.

Failure to be conspicuous: If a business buries a disclaimer in fine print on page 40 of a contract, or hides it behind multiple hyperlinks that a reasonable consumer might not see, a court can—and often will—declare the disclaimer unenforceable.

Clear, Unambiguous Language

Cal. Com. Code § 2316(2) requires disclaimers to be phrased in language that a reasonable person could understand. For example, disclaiming the implied warranty of merchantability must expressly mention “merchantability.” For the implied warranty of fitness for a particular purpose, the disclaiming language might state something like: “Seller makes NO WARRANTY that the goods sold hereunder are fit for ANY PARTICULAR PURPOSE.” Courts look for direct references to “merchantability” or “fitness” to ensure clarity.

Integration Clauses and “No Reliance” Provisions

Contract drafters often incorporate an integration clause disclaiming any representation not stated in the contract. A typical clause might read: “This agreement is the entire agreement between the parties, and the Buyer disclaims reliance on any statement or representation not included herein.” While integration clauses can be effective at limiting a buyer’s reliance on extrinsic statements, they can fail if the disclaimers clash with statutory mandates (e.g., consumer protection laws). Courts may also disallow them if they effectively disclaim liability for fraud or other intentional misconduct.

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Express Warranties: When and How They Can Be Disclaimed

Creation of an Express Warranty

Per UCC § 2-313 (reflected in Cal. Com. Code § 2313), an express warranty arises if the seller:

1. Makes an affirmation of fact or promise about goods that becomes part of the basis of the bargain.
2. Describes the goods in a way that becomes part of the basis of the bargain.
3. Shows a sample or model, making it an express warranty that the goods conform to the sample or model.

For technology companies, an express warranty could arise if marketing materials state that their AI software “achieves 99% accuracy in data labeling.” If that statement induces the customer to purchase, it may be deemed an express warranty.

Conflicts with Disclaimer Provisions

Once an express warranty is created, disclaimers cannot negate or limit it in a manner that would result in an “unfair surprise” to the buyer. For instance, disclaiming “all express or implied warranties” in a separate fine-print section might conflict with a main provision guaranteeing specific results or performance. Courts will typically resolve such contradictions by upholding the express warranty and invalidating the disclaiming language.

The Overriding Effect of Statutory Requirements

Where consumer protections come into play, disclaimers that attempt to reduce or entirely eliminate statutory warranties might be void. For instance, the Song-Beverly Consumer Warranty Act (Cal. Civil Code § 1790 et seq.) contains mandatory warranties for consumer goods. A direct conflict between an express warranty mandated by the statute and a contractual disclaimer usually results in the disclaimer being nullified.

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Implied Warranties: The Battle Over “AS IS” and “With All Faults”

Implied Warranty of Merchantability

Under UCC § 2-314 (and Cal. Com. Code § 2314), goods must meet a certain threshold of quality, among other criteria:

• They must pass without objection in the trade.
• They must be fit for the ordinary purposes for which such goods are used.
• They must be of even kind, quality, and quantity within each unit and among all units involved.
• They must conform to any promise or affirmation of fact made on the container or label.

This warranty arises automatically for merchants selling goods (the merchant must regularly deal in goods of that kind).

Disclaimer: To disclaim the implied warranty of merchantability, one can use “as is” or “with all faults” language if done conspicuously, or specifically mention the term “merchantability.” See Cal. Com. Code § 2316(2).

Implied Warranty of Fitness for a Particular Purpose

Under UCC § 2-315 (mirrored in Cal. Com. Code § 2315), this warranty arises if:

1. The buyer has a particular purpose for the goods.
2. The seller has reason to know that purpose.
3. The buyer relies on the seller’s skill or judgment to select suitable goods.

Disclaimer: Disclaiming this warranty requires conspicuous writing, such as: “Seller makes no warranty that the goods sold hereunder are fit for any particular purpose.” Failing to use sufficiently direct or conspicuous language leaves the disclaimer vulnerable.

“AS IS” Clauses in E-commerce and Digital Goods

In e-commerce, software, and AI contexts, disclaimers often read “Services are provided ‘AS IS’ and ‘WITH ALL FAULTS.’” While many courts across the U.S. permit disclaimers of implied warranties in intangible goods or digital services (depending on how the transaction is characterized under the UCC or other commercial statutes), the disclaimers still must be conspicuous. If the disclaimers are hidden in a “clickwrap” agreement that is not presented to the user in a conspicuous manner, courts may invalidate them.

Browsewrap vs. Clickwrap:

• Browsewrap disclaimers (e.g., placing disclaimers in Terms of Service accessible only via a small link at the bottom of the webpage) are more vulnerable to being deemed inconspicuous.
• Clickwrap disclaimers (where the user affirmatively clicks an “I agree” box) are more likely to be enforced, provided the disclaimer is visible and comprehensible.

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Limits on Disclaimers: Fraud, Public Policy, and Unconscionability

Fraud or Intentional Misrepresentation

A contractual disclaimer usually cannot shield a party from liability for fraud or intentional misrepresentation. If a buyer relied on a fraudulent statement or material misrepresentation, disclaimers about “as is” or “no reliance” may not protect the seller. Courts do not allow disclaimers to condone outright deceit.

Public policy also bars disclaimers that attempt to exculpate a seller from intentional or reckless harm to consumers.

Unconscionability

Unconscionability serves as a critical doctrine limiting disclaimers of warranty. Under UCC § 2-302, a court can refuse to enforce a contract or any clause of it if it finds that the contract or clause is unconscionable at the time it was made. In California, Cal. Civil Code § 1670.5 similarly codifies unconscionability. There are generally two components:

1. Procedural unconscionability: Concerns how the contract was formed (unequal bargaining power, hidden disclaimers, “take-it-or-leave-it” terms).
2. Substantive unconscionability: Examines whether the terms themselves are overly harsh or one-sided.

If both elements are present to a certain degree, a court may strike down or reform disclaimers of warranties.

Violation of Consumer Protection Statutes

State and federal consumer protection statutes, like Magnuson-Moss or the Song-Beverly Act, often override disclaimers that conflict with statutory requirements. This is especially relevant to e-commerce sellers dealing with end consumers, as disclaimers that would disclaim mandatory consumer protections (like a 30-day return period for defective goods, or certain statutory warranties) are not enforceable.

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Scenarios Where Plaintiffs Can Overcome Disclaimers

1. Conflict with Express Warranty: When disclaimers conflict with a clear, express representation or guarantee in the contract. Courts typically uphold the express representation and strike down the disclaimer as contradictory.
2. Fraud or Misrepresentation: If a seller intentionally misled or made false statements, disclaimers are not effective to bar liability for fraud.
3. Non-Conspicuous or Ambiguous Language: If disclaimers are hidden in small print, overshadowed by contradictory statements, or couched in vague or legalistic terms, courts may deem them unenforceable.
4. Unconscionability: If disclaimers are deemed unconscionable under UCC § 2-302 or state equivalents, they can be invalidated.
5. Non-Compliance with Statutory Mandates: If disclaimers violate the Magnuson-Moss Act’s rule that implied warranties cannot be wholly disclaimed when an express written warranty is given, or if disclaimers conflict with mandatory state consumer protection laws, disclaimers will fail.
6. Lack of Mutual Assent: If the buyer did not agree to or have meaningful notice of the disclaimers (for instance, disclaimers were added after purchase), a court may find no “meeting of the minds,” thus invalidating them.

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Practical Considerations for Drafting Effective Disclaimers

Tailoring to the Type of Business

E-commerce:

• Ensure disclaimers are accessible to consumers in a conspicuous manner (e.g., a prominent pop-up or check-box).
• Provide short, plain language disclaimers.
• Use headings or color highlights so disclaimers stand out from standard “Terms and Conditions.”

Software as a Service (SaaS):

• Many SaaS agreements disclaim warranties for uptime, data security, and fitness for particular business uses.
• At minimum, disclaimers should mention “merchantability” or “fitness,” if the transaction is considered a sale of goods or has elements of goods.
• Include disclaimers of implied warranties in a dedicated clause with a heading like, “Disclaimer of Implied Warranties.”

AI and Emerging Technologies:

• Because AI products may be somewhat unpredictable, disclaimers might note that “results may vary,” or that “no express or implied warranty is provided regarding accuracy for any particular use case.”
• Use disclaimers that highlight inherent uncertainties in AI outputs (e.g., disclaimers about generative text possibly containing errors).
• Ensure disclaimers comply with any relevant consumer or data protection rules where the AI product is sold.

Compliance with State and Federal Statutory Requirements

For businesses selling tangible consumer products in California, disclaimers must align with the Song-Beverly Consumer Warranty Act (Cal. Civil Code § 1790 et seq.) and, if a written warranty is provided, with the Magnuson-Moss Warranty Act. If disclaimers conflict with these statutes, they risk invalidation.

Conspicuous Formatting Strategies

• Label disclaimers with uppercase headings: “DISCLAIMER OF WARRANTIES,” “LIMITATION OF LIABILITY.”
• Use bullet points or numbered subheadings to highlight disclaimers.
• Insert disclaimers near the relevant provisions in the contract rather than burying them at the end.
• Provide a separate section in the online purchase process (in the case of e-commerce) requiring the user to specifically agree to disclaimers of warranties.

Language That Indicates Actual Notice

If feasible, require the buyer or user to scroll through or otherwise acknowledge disclaimers before finalizing the transaction. Courts often look favorably upon disclaimers that the user “affirmatively accepted” (e.g., by clicking “I agree” directly under the disclaimer text).

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Litigation Strategies: How Plaintiffs Challenge Disclaimers

Arguing that the Disclaimer Is Inconsistent with an Express Promise

Plaintiffs frequently allege that an express warranty existed based on sales material or an affirmation of fact. If successful, disclaimers that attempt to negate or severely limit that express warranty will often fail. The plaintiff’s burden is usually to show that the promise was a basis of the bargain and that disclaiming it would amount to an unfair or deceptive practice.

Citing Unconscionability and Public Policy

If the disclaimer was:

• Hidden in fine print,
• Created during a time when the buyer had no meaningful choice (often in “take-it-or-leave-it” consumer contracts),
• Directed at a vulnerable consumer group or used for essential goods/services,

A plaintiff can argue unconscionability or violation of public policy. Courts especially scrutinize disclaimers that attempt to waive liability for personal injuries or disclaim fundamental statutory consumer protections.

Demonstrating Lack of Actual Notice or Assent

In an e-commerce context, a plaintiff might allege the disclaimers were placed in a “browsewrap” agreement that was never opened or noticed, or that were overshadowed by contradictory marketing claims. If the disclaimers are not clearly displayed, courts might rule that the user never meaningfully agreed to them.

Showing the Disclaimer Violates Magnuson-Moss or Other Consumer Statutes

If the seller provided any form of written warranty, disclaimers of implied warranties might violate 15 U.S.C. § 2308. Plaintiffs can also point to the presence of contradictory language or failure to label disclaimers as “conspicuous,” especially if disclaimers do not use bold headings, uppercase text, or other means to stand out.

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Special Issues in AI, Data, and Intangible Products

The UCC’s Applicability to Software and Intangibles

Courts differ on whether the UCC applies to software or intangible goods, and disclaimers often hinge on classification. Some states treat software as a “good,” subject to the UCC. Others treat it as a service. Federal and state consumer protection laws can still apply to digital transactions, and disclaimers must be carefully worded.

AI-Powered Tools and “Output Variability”

AI disclaimers often emphasize that results are not guaranteed. If, however, a seller markets an AI system with definite statements like “We guarantee 95% accuracy in all cases,” that can create an express warranty. Any contradictory disclaimers would be suspect. Also, disclaimers that attempt to disclaim liability for biased or faulty AI outputs must still meet conspicuousness requirements, and cannot disclaim liability for fraudulent or grossly negligent design.

Data Processing and Privacy Warranties

Some tech companies disclaim warranties related to data integrity or privacy. However, disclaimers of compliance with data privacy laws (e.g., disclaiming responsibility for personal data breaches) may not be enforceable if they conflict with statutory obligations (such as California Consumer Privacy Act or other privacy statutes). The disclaimers can disclaim a private cause of action for certain losses but cannot disclaim obligations or liability imposed by law.

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Drafting “Best Practices” for Businesses

1. Use Specific and Unambiguous Language

• Mention “implied warranty of merchantability” and “implied warranty of fitness for a particular purpose” when disclaiming these warranties.
• For express warranties, carefully limit or define the scope of statements in marketing materials to avoid inadvertently creating broad warranties.

2. Ensure High Visibility

• Employ bold, capital letters, or separate headings.
• Place disclaimers in a dedicated section with a heading like “LIMITED WARRANTY AND DISCLAIMERS.”
• In online transactions, use “clickwrap” or “signwrap” methods that require explicit user consent.

3. Be Consistent Throughout the Contract

Contradictory statements can undermine disclaimers. For example, do not promise “guaranteed results” in one clause while disclaiming “any warranty of results” in another.

4. Assess Consumer Statutes and Federal Law

• If your product is a “consumer product” under Magnuson-Moss, disclaimers of implied warranties may be heavily restricted if you issue a written warranty.
• California sellers face heightened consumer protection requirements under the Song-Beverly Act.
• For intangible or AI products, check if state or federal consumer protection laws apply to digital sales.

5. Obtain Affirmative Consent

• Use an e-signature or check-box acceptance in online agreements.
• Provide a short summary or bullet list of disclaimers prior to acceptance.

6. Avoid Blanket Exclusions of All Liability

Most jurisdictions will not uphold disclaimers that disclaim liability for fraud, gross negligence, or statutory consumer protections. Attempting to disclaim everything can backfire and lead to a disclaimer being invalidated in its entirety.

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When Disclaimers Are Likely to Be Upheld

1. Commercial-to-Commercial (B2B) Transaction: Where both parties are sophisticated businesses, disclaimers are more likely to be upheld, provided they are conspicuous, mention merchantability/fitness, and do not conflict with express warranties.
2. No Express Warranty Has Been Made: If a seller does not provide a written or oral representation about product performance and the disclaimers are clearly stated, disclaimers can often be enforced.
3. Proper Formatting and Negotiation: If the disclaimer is part of a negotiated agreement, or if each party had counsel and the disclaimers are spelled out in large print (and repeated or boldfaced), it’s more likely to stand.
4. Non-Consumer Context: In a pure commercial context, courts are less concerned about the consumer protection dimension and more tolerant of disclaimers among sophisticated or equal bargaining-power parties.

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Strategies for Plaintiffs to Overcome Disclaimers

Arguing Lack of Conspicuousness

A typical approach is to show that the disclaiming language was either hidden or overshadowed, such that a reasonable person would not have noticed it. For e-commerce transactions, an expert might highlight how the website’s design did not adequately bring disclaimers to the user’s attention.

Demonstrating Contradictory Express Warranties

Any explicit promises in marketing, packaging, or contract text that conflict with disclaimers can give rise to a direct express warranty. Plaintiffs can argue the disclaimers are void because they attempt to disclaim a promise that formed the basis of the bargain.

Highlighting Unconscionability in Consumer Transactions

If the disclaimers are imposed on a consumer through a non-negotiable “contract of adhesion,” and especially if the product or service is essential, it might be unconscionable. If the disclaimers result in no meaningful remedy for the buyer, some courts may find them substantively unconscionable.

Statutory or Regulatory Violations

Pointing to Magnuson-Moss or a state’s consumer protection laws can override disclaimers that conflict with minimum warranty obligations. If the disclaimers hamper a consumer’s right to certain statutory remedies, that alone often invalidates them.

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Cross-Jurisdictional Variations and General Principles

Although this post focuses on California law and general U.S. principles, it bears repeating that states vary widely on the enforcement of disclaimers. Some states require disclaimers to be written with specific statutory language, while others follow the UCC in a more flexible manner. However, the key consistent principles across most jurisdictions include:

• Disclaimers cannot disclaim fraud, intentional misconduct, or certain statutory protections.
• Disclaimers must not conflict with express warranties or mislead consumers.
• The disclaimers must be conspicuous and use appropriate statutory language referencing “merchantability” or “fitness” to disclaim those implied warranties.
• Consumer protection laws impose stricter limitations on disclaimers for consumer transactions than for purely commercial ones.

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Real-World Examples and Case References

1. Wilson Trading Corp. v. David Ferguson, Ltd. (N.Y. 1976) – While not a California or federal case, it illustrates a general approach to disclaimers under the UCC, emphasizing the importance of conspicuousness and the inability to disclaim an express promise that formed part of the bargain.
2. Tunkl v. Regents of University of California, 60 Cal.2d 92 (1963) – A seminal California case on the invalidity of exculpatory clauses that violate public policy. While dealing more with personal injury in a hospital context, Tunkl’s reasoning is frequently cited in disclaiming liability and warranties where essential services are at stake.
3. Hauter v. Zogarts, 14 Cal.3d 104 (1975) – Discussed disclaimers in the context of an advertisement’s explicit promise. Emphasizes the difficulty of disclaiming an express representation about product performance.
4. Long v. Provide Commerce, Inc. (Cal. Ct. App. 2016) – This case examines browsewrap disclaimers in e-commerce and underscores how burying disclaimers in inconspicuous links can defeat enforceability.

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Drafting Suggestions for Specific Industries

E-commerce Merchants

• Provide a hyperlinked Terms of Service (TOS) with disclaimers, but also incorporate a pop-up or check-box acceptance at checkout.
• Reiterate disclaimers in the order confirmation email.
• Use boldface, uppercase disclaimers referencing “NO IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS.”

AI and Software Providers

• Acknowledge in the disclaimers that AI/ML outputs can be unpredictable.
• Emphasize that no representation is made about 100% reliability or fitness for a specific specialized task unless specifically negotiated.
• For consumer-facing AI tools, ensure compliance with any relevant consumer statutes and the Magnuson-Moss Act if a written warranty is provided.

Corporate and B2B Settings

• Use disclaimers as part of a broader limitation of liability clause, capping damages at a specific monetary amount.
• Ensure disclaimers mention “merchantability” and “fitness” by name if disclaiming them.
• Include disclaimers in purchase orders, master service agreements, or licensing agreements, emphasizing that the disclaimers reflect an arms-length transaction between sophisticated entities.

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The Path to Litigation: Practical Guidance for Both Sides

For Plaintiffs Challenging Disclaimers

1. Investigate the Contract Formation Process: Was there an opportunity to negotiate? Were disclaimers added after initial negotiations concluded?
2. Identify Any Express Warranties: Pinpoint explicit statements or claims about product performance that might override disclaimers.
3. Check for Statutory Protections: If you are a consumer, look at Magnuson-Moss, the Song-Beverly Act, or other relevant consumer protection laws.
4. Gather Evidence of Fraud or Misrepresentation: If the seller actively misled, disclaimers typically do not apply.

For Defendants Relying on Disclaimers

1. Demonstrate Conspicuousness: Show that disclaimers were displayed in uppercase, bold, or a unique color, and that the buyer affirmatively assented (especially for online transactions).
2. Show Non-Contradictory Contract Terms: Prove that disclaimers do not conflict with any express warranties.
3. Argue that the Buyer Is Sophisticated: In B2B contexts, highlight that both sides had counsel, diminishing unconscionability arguments.
4. Confirm No Violations of Public Policy: Indicate that disclaimers do not disclaim fraud, statutory protections, or liability for personal injury.

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Conclusion

Disclaimers of warranties are powerful contractual tools that can significantly limit or even eliminate certain liabilities. However, their enforceability hinges on multiple factors:

• Strict compliance with the “clear and conspicuous” requirement.
• The presence or absence of express warranties or contradictory language.
• The context of the sale (B2B vs. consumer).
• Potential overarching constraints like the Magnuson-Moss Warranty Act, Song-Beverly Consumer Warranty Act, and other federal or state consumer protection statutes.
• Common law rules against unconscionable, fraudulent, or public policy–violating disclaimers.

For businesses, the key takeaway is to ensure disclaimers are drafted with precision, transparency, and clarity. Using disclaimers that specifically mention merchantability, fitness, or statutory references can strengthen enforceability. In e-commerce and AI contexts especially, disclaimers must be integrated in a user-friendly, prominent manner.

For plaintiffs, disclaimers are not insurmountable obstacles. Courts often strike them down if they are hidden, contradictory, or unconscionable, or if they conflict with statutory mandates. As a result, a plaintiff who encounters a seemingly ironclad “AS IS” or “WITH ALL FAULTS” clause may still have recourse if the disclaimers fail these legal tests.

Ultimately, the key is context: disclaimers that might stand in one commercial setting can be invalid in a consumer transaction. The disclaimers that do not comply with statutory law or that conflict with an express warranty could be thrown out entirely. By knowing both the strengths and weaknesses of disclaimers of warranties, businesses and consumers alike can navigate contractual relationships more confidently, reducing the likelihood of unwelcome legal surprises.

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FAQ – Frequently Asked Questions

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What if a seller claims they never intended to create an express warranty—can the court still hold them liable for one?

Yes. Under the Uniform Commercial Code (UCC) and parallel California Commercial Code provisions, express warranties arise if a seller’s statements or descriptions become part of the basis of the bargain. The seller’s subjective intent often matters less than whether the buyer reasonably interpreted the statements as a guarantee or promise. For instance, if a sales brochure or product labeling states, “Our AI software achieves 98% accuracy,” and the buyer relies on that claim, courts will likely treat it as an express warranty—even if the seller later insists it never intended it to be binding. Courts look to objective evidence of the parties’ communications and the buyer’s reliance rather than the seller’s internal subjective beliefs.

A seller who wants to avoid inadvertently creating an express warranty must refrain from making definitive promises or performance claims in marketing. If disclaimers explicitly conflict with the language in a brochure, the disclaimers are often ineffective. Therefore, a seller’s best strategy is to ensure all marketing statements align with their disclaimers and do not inadvertently promise more than they are prepared to stand behind.

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Do disclaimers in online “Terms and Conditions” apply when the user never reads them?

It depends on how conspicuous and affirmatively accepted the Terms and Conditions are. If the user must click “I agree” (a “clickwrap” or “sign-in wrap”) after being provided with a sufficiently prominent disclaimer link or text, courts generally view that as enforceable. However, disclaimers hidden in “browsewrap” agreements—where the user is merely presumed to have seen them—are often deemed unenforceable unless the website design draws attention to those disclaimers.

Courts focus on whether a reasonable person in the user’s position would have noticed the disclaimers. If a business places disclaimers behind small hyperlinks, with no mention of them during checkout or account creation, it can be argued that the user never meaningfully assented. Some states hold that even if a user could have discovered the disclaimers with a few clicks, the disclaimers still must be displayed in a conspicuous format to have legal effect. The stronger the evidence of user awareness and voluntary acceptance, the more likely the disclaimers will be upheld.

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Can disclaimers be enforced against a business client if the business never signed the contract but performed under it?

In many jurisdictions, including California, a party can be bound to contractual terms—including disclaimers—if that party’s actions and conduct manifest acceptance. This is sometimes referred to as “acceptance by performance.” Even in the absence of a signature, courts may find that the business client manifested its agreement by knowingly proceeding with the contract’s benefits under circumstances that make it clear they were aware of or should have been aware of the disclaimers.

However, for disclaimers of warranties to be enforced, a court typically also wants proof that the disclaimers themselves were conspicuous and readily available. If the disclaimers were inconspicuous or only provided after the parties began their working relationship, the enforcing party might struggle to show genuine assent. So, while performance can lock a party into many of a contract’s terms, disclaimers must still meet general requirements of clarity, consistency, and conspicuousness.

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What role does the phrase “merchantability” play in disclaiming implied warranties?

Specific mention of “merchantability” is crucial when disclaiming an implied warranty of merchantability. Under UCC § 2-316 (mirrored by Cal. Com. Code § 2316), a disclaimer must either use “merchantability” by name or contain conspicuous language such as “as is” or “with all faults” to be valid. Courts across the country emphasize that general disclaimers like “Seller makes no warranties” might not be enough if they do not explicitly mention merchantability.

In practical drafting terms, this means that if a business wishes to disclaim the implied warranty of merchantability, it should state something like: “SELLER SPECIFICALLY DISCLAIMS THE IMPLIED WARRANTY OF MERCHANTABILITY.” This helps to ensure enforceability. Failure to include the word “merchantability” or equally clear language can render the disclaimer ineffective, especially if a consumer or commercial buyer later alleges the goods were not of average, acceptable quality.

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Are disclaimers in contracts for services (as opposed to goods) treated differently?

Services contracts often fall outside the direct scope of the UCC’s warranties, which primarily apply to the sale of goods. However, courts can still apply analogous principles of disclaimers to service agreements under state common law. In California, disclaimers for services may need to meet general contract law requirements, including clarity, absence of fraud, and non-violation of public policy. If a service contract includes disclaimers that are hidden, contradictory, or unconscionable, courts might void them.

Moreover, the concept of an implied warranty in services can arise under common law or through special statutes (e.g., for certain professional services). In many professional contexts—like legal, medical, or architectural services—ethical standards or public policy can limit disclaimers. However, purely commercial or technical services (e.g., software development as a service) can often disclaim implied obligations if done conspicuously and not barred by consumer protection laws.

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How can disclaimers address evolving technology, like AI that changes via updates?

Disclaimers for AI or other evolving technology should include language acknowledging that the product or system’s performance may vary over time and that future updates could alter capabilities. A typical disclaimer might say: “Performance metrics and functionality may change with periodic updates, and no warranty is made that future versions will conform to prior functionality, accuracy, or outcomes.”

Additionally, disclaimers should highlight that the AI’s output might not be error-free. Courts will assess the clarity and prominence of these disclaimers. They may also check if the disclaimers conflict with any express promise of continuity or guaranteed performance. Finally, if the seller continues to advertise a particular performance level after changes, that could create an updated express warranty which overrides earlier disclaimers. Businesses that provide “evergreen” AI solutions must consistently update disclaimers to reflect current performance claims.

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Does disclaiming warranties also disclaim liability for negligence or tort claims?

Not necessarily. Disclaimers of warranties typically address contractual obligations related to product quality or performance. To disclaim liability for negligence or other tort claims, a contract must include a separate exculpatory clause or limitation-of-liability provision stating that the seller is not liable in tort for certain types of damages. Even then, many jurisdictions (including California) do not allow businesses to disclaim liability for gross negligence, willful misconduct, or fraud.

For instance, you might have a valid disclaimer of “all warranties, express or implied,” but still be held liable if your negligence caused significant personal injury or property damage. Courts often reason that disclaimers cannot undermine fundamental duties to act with reasonable care or to avoid fraud. Therefore, disclaimers of warranties and disclaimers of tort liability are not identical and need distinct treatment in a contract.

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Is a warranty disclaimer in a purchase order on the seller’s standard form binding if the buyer never signed it?

It can be binding if the buyer manifested assent by performing under the purchase order and had reasonable notice of the terms. Under the “battle of the forms” rules in UCC § 2-207, additional or different terms in a confirmation or purchase order might become part of the contract between merchants unless they materially alter the deal or the other party objects.

A disclaimer of warranties can be considered a “material alteration,” which means it might not automatically become part of the contract if the buyer’s acceptance was conditional on different or absent disclaimers. Courts look at factors like whether the buyer expressly objected, whether the disclaimer drastically changes the contract’s nature, and whether disclaimers are standard in the trade. The more significant the disclaimer, the more likely courts are to see it as a material alteration requiring explicit agreement.

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What if my contract lumps together “disclaimer of warranties” and “limitation of liability” in one paragraph—can that cause problems?

It can be acceptable to combine disclaimers of warranties and limitation-of-liability clauses in the same paragraph, but clarity is paramount. Courts want to see that each concept is distinctly addressed and conspicuous. If the language is confusing or contradictory, a court might strike down one or both provisions.

For example, if the contract states: “All warranties are disclaimed, and the seller shall not be liable for any damages whatsoever,” that might be read ambiguously. You might want to use subheadings: “Disclaimer of Warranties” in one sub-paragraph and “Limitation of Liability” in another, each in a boldface or capitalized heading. You also need to confirm that disclaiming warranties does not inadvertently disclaim liability for negligence or statutory violations. Both disclaimers of warranty and liability-limiting terms are enforceable in principle, but the drafting must ensure each is presented clearly and meets relevant statutory or common law requirements.

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Are disclaimers in beta-test agreements for software or AI more likely to be enforced?

Yes, disclaimers in beta-test agreements are commonly upheld because courts generally recognize that beta testers are aware they’re receiving unfinished software or AI with potential bugs. If the disclaimers are clearly labeled and the testers consent in writing, disclaimers stating “the product is in beta phase, may contain defects, and is provided as-is” are often found enforceable.

Even so, disclaimers remain subject to consumer protection laws if the beta-test participants are end consumers rather than sophisticated professionals. For instance, if the beta test is effectively a consumer release and the business markets it as near-finished software, disclaimers might clash with marketing statements that create an express warranty. As always, disclaimers that conflict with explicit promises or statutory protections will be scrutinized.

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In a B2B context, can the parties completely negate all implied warranties if both sides agree?

Generally, yes. In commercial (B2B) transactions, parties with relatively equal bargaining power can agree to disclaim all implied warranties—merchantability, fitness for a particular purpose, and so on—provided the disclaimers are clear, conspicuous, and do not violate public policy. UCC § 2-316 explicitly allows disclaimers of implied warranties in commercial sales if certain drafting requirements are met.

However, some state or federal regulations might impose mandatory obligations that cannot be disclaimed even in B2B contexts. And if the disclaimers are unconscionable or were introduced under deceptive circumstances, courts can strike them down. But as a general principle, if two businesses knowingly and voluntarily enter a contract disclaiming all implied warranties, courts usually respect that arrangement.

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Can disclaimers of warranties be effective if the contract never mentioned the word “disclaimer”?

Yes, the word “disclaimer” need not appear, but the language must clearly communicate that the seller is not warranting any particular quality or performance. Some contracts might say, “No promise, guarantee, or assurance is made regarding the functionality, performance, or merchantability of the goods,” effectively disclaiming warranties without using the term “disclaimer.”

However, explicit terms like “disclaimer of warranties” or “Seller disclaims all warranties, express or implied” are much clearer. Without clarity, the buyer can argue that the contract is ambiguous as to whether the seller intended to disclaim warranties. Courts prefer direct, unambiguous drafting, especially for disclaimers in consumer contexts.

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If a business uses “boilerplate” disclaimers in multiple forms, can it inadvertently create conflicting disclaimers?

It can. When a business repeatedly references disclaimers in different contract sections or uses pre-printed boilerplate in multiple documents (purchase orders, confirmations, website terms, etc.), there is a risk of internal inconsistency. For instance, one clause might disclaim “all warranties,” while another states “This product is guaranteed free from defects for 12 months.” Courts can interpret such contradictions as creating confusion or as forging an express warranty that overrides the disclaimers.

Consistency is crucial. Lawyers often perform a “contract audit,” ensuring that disclaimers align across all forms. The presence of contradictory statements is a red flag that can lead to disclaimers being deemed non-binding or overshadowed by an affirmative guarantee found elsewhere in the documents.

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Is it legal to disclaim warranties in a contract for the sale of goods “across state lines” if state laws differ?

Yes, but you need to consider which jurisdiction’s law applies. Many contracts include a “choice of law” clause specifying which state’s law governs. If the choice of law is enforceable under conflict-of-law rules, disclaimers that comply with that chosen state’s legal requirements will generally be recognized, even if the transaction crosses state lines. However, if the transaction is a consumer sale, some states’ consumer protection statutes might override the chosen law if the consumer resides in a state with stronger protections.

Federal law may also come into play, especially the Magnuson-Moss Warranty Act if it involves consumer products with a written warranty. In short, disclaimers in interstate transactions are legal, but the enforceability can hinge on choice-of-law provisions, the location of the buyer, the buyer’s status (consumer or business), and the relevant federal statutes.

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Can disclaimers ever eliminate a buyer’s ability to return a product for being defective?

A disclaimer of warranties can state that the product is sold “as is,” with no implied warranties, effectively removing typical rights to return defective goods under the implied warranty of merchantability. But disclaimers cannot override mandatory return or refund rights created by consumer protection statutes. In many states, certain consumer goods must meet minimum standards, and disclaimers that attempt to abolish the right to return fundamentally defective products may be deemed invalid.

Additionally, if the seller provided an express promise (e.g., “30-day guarantee” or “satisfaction guaranteed”), disclaimers cannot revoke that promise midstream. A well-drafted disclaimer might limit returns to certain reasons or certain time frames, but it generally cannot strip away statutory rights or conflict with written warranties. Ultimately, if the buyer is a consumer, disclaimers that remove all recourse for defective goods can be challenged under unfair or deceptive acts and practices statutes.

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How do disclaimers interact with arbitration clauses or forum selection clauses?

They often appear together in the same agreement, but each clause serves a different function. An arbitration clause requires disputes to go before an arbitrator rather than a court, while a disclaimer of warranties limits or negates certain remedies. Both must be clearly presented. Some plaintiffs have successfully argued that burying both disclaimers and arbitration clauses in fine print is procedurally unconscionable, rendering them unenforceable.

If the disclaimers or arbitration provision heavily favor the drafter, a court might rule the contract unenforceable as a whole. However, if the disclaimers are straightforward and the arbitration provision is clearly disclosed, courts will typically enforce both. Federal policy favors arbitration (Federal Arbitration Act, 9 U.S.C. § 1 et seq.), so disclaimers and arbitration clauses often stand so long as they are not inherently unconscionable.

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Are disclaimers necessary if the seller wants to limit remedies rather than disclaim warranties entirely?

Yes, it’s still advisable. While a seller can include a remedy-limitation clause (e.g., “Buyer’s sole and exclusive remedy shall be repair or replacement”), disclaimers of implied warranties are often used in tandem. If you only limit remedies but do not disclaim implied warranties, you might still be subject to claims that the goods were unmerchantable or unfit, forcing the remedy limitation to come into play.

If an implied warranty exists and the goods are defective, a court might conclude the buyer is entitled to more robust remedies than the contract states, particularly if the limitation of remedy fails of its essential purpose (UCC § 2-719). Therefore, disclaimers plus carefully worded remedies-limitation clauses provide a stronger defense. Each approach—warranty disclaimer and remedy limitation—serves a different but complementary function in risk management.

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What if a user acknowledges a disclaimer for a free trial version but later pays for the product—does that disclaimer carry over?

It depends on whether the terms for the paid version incorporate the same or updated disclaimers. If the user transitions from a free trial to a paid subscription and the contract states that “All disclaimers for the free trial also apply to the paid version,” courts may allow continuity. But if the user’s paid subscription involves a new agreement or updated Terms and Conditions that differ from the free trial disclaimers, the older disclaimers might not automatically remain in effect.

In essence, disclaimers from the free trial do not necessarily govern the subsequent paid arrangement unless the disclaimers are explicitly adopted in the new agreement. Businesses that convert free users into paying customers must ensure disclaimers remain visible and accepted anew, or are unequivocally carried over to the paid plan. Otherwise, a user can argue they never agreed to disclaimers for the new, paid relationship.

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Do disclaimers work the same way in international sales governed by the CISG?

Not exactly. The United Nations Convention on Contracts for the International Sale of Goods (CISG) governs certain cross-border contracts involving nations that have ratified the treaty. While the CISG has provisions about warranties (Articles 35–44), it does not use the exact “merchantability” or “fitness” language from the UCC. However, sellers can still disclaim warranties if they follow the CISG’s requirements of clarity, agreement, and no conflict with fundamental breach principles.

For disclaimers under the CISG, the parties can stipulate that domestic law (like the UCC or specific state law) applies to fill gaps, or they can incorporate disclaimers directly. The key is to ensure that disclaimers comply with the CISG’s approach to contract formation (Articles 14–24) and any public policy constraints in the buyer’s jurisdiction. If either side wants disclaimers recognized, they often explicitly exclude the CISG or tailor disclaimers to mirror the Convention’s standards.

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If a disclaimer inadvertently omits a small but important detail, can the buyer still sue under that omitted detail?

Potentially. If the disclaimer is not comprehensive and fails to disclaim a particular aspect—say, the product’s compliance with an implied promise that it meets a specific regulation—then a buyer might still sue under that implied or express representation. Disclaimers must be comprehensive and carefully drafted to ensure coverage of all relevant aspects of the product or service.

For instance, if the disclaimers mention “no warranty of merchantability or fitness” but never address a claim about “compliance with safety standards,” the buyer can argue an implied warranty of compliance or an express representation was not negated. Courts will interpret disclaimers narrowly and often favor the buyer if there is ambiguity. Thorough disclaimers that detail each dimension of performance or compliance are more effective than vague or one-size-fits-all language.

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Do disclaimers of warranties apply if the seller or licensor substantially changes the product after the sale?

This issue can be fact-dependent. If the seller or licensor pushes updates or modifications (for instance, in a SaaS model) after the buyer has agreed to the disclaimers, a court will evaluate whether those disclaimers still apply to post-sale modifications. In many ongoing service or subscription scenarios, disclaimers automatically extend so long as the terms of service state they govern updates and the user continues to use the service.

However, if the modifications fundamentally change the nature of the product and create new express warranties—for instance, the seller promising that “the new upgrade will fix all known issues”—the disclaimers might not cover issues arising from that new promise. Each update can introduce new obligations or disclaimers, and if no disclaimers specifically cover the modifications, the buyer could argue they relied on an un-disclaimed, newly created warranty. Ideally, disclaimers in dynamic contexts explicitly mention that they apply to subsequent updates or modifications unless otherwise specified.

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Can disclaimers of warranties protect from third-party claims, such as a downstream user who was not party to the original contract?

Generally, disclaimers of warranties only bind the parties to the contract. If a third party acquires or uses the product, they may not be bound by disclaimers absent privity or a recognized legal relationship. However, some disclaimers explicitly state the disclaimers apply to “any end user of the product.” If the third party is aware of those disclaimers and uses the product under the same contract, they might be bound.

Still, many states limit a seller’s ability to disclaim obligations to foreseeable third parties. For instance, if a product defect injures a downstream user, disclaimers of warranties do not necessarily defeat a product liability or negligence claim. Courts also examine how the disclaimers were communicated to the third party. If the third party had no notice, it is difficult to enforce disclaimers against them. Ultimately, disclaimers are more robust when they explicitly extend to all subsequent purchasers or users and are physically included (or referenced) with the product’s documentation.

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Are disclaimers for intangible goods or licenses more complicated than for physical goods?

Often yes, because intangible goods—like digital downloads, software licenses, AI models, or data sets—may fall outside the classical UCC scope (which primarily applies to “goods”). Courts determine whether the essence of the transaction is the sale of goods, a license, or a service. For intangible products, disclaimers must be drafted carefully to reflect that the sale might not be subject to the same default implied warranties as tangible goods.

Some jurisdictions still apply UCC principles by analogy to software or digital goods. In other cases, the disclaimers must rely on general contract law and mention that no implied promises regarding performance, compatibility, or reliability are made. Additionally, disclaimers for intangible goods often incorporate references to the intangible’s inherent unpredictability (e.g., an AI system’s outputs). The key is clarity, so that the buyer or licensee understands they have limited recourse if the intangible product fails to meet expectations.

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How do disclaimers of warranties relate to “indemnification” provisions?

They address different risks. A disclaimer of warranties focuses on limiting or negating obligations about product or service quality, while an indemnification provision typically requires one party to cover certain losses or liabilities faced by the other (e.g., third-party intellectual property infringement claims, personal injury claims, or product liability).

Sometimes, disclaimers can operate alongside indemnities. For example, a seller might disclaim warranties for the product’s suitability for the buyer’s use, yet agree to indemnify the buyer for any third-party patent infringement claims. Or the seller might disclaim all warranties while also requiring the buyer to indemnify the seller if the buyer misuses the product. Each clause must be distinctly stated so that the interplay is clear: disclaimers manage warranty-based liability, while indemnification shifts other types of liability from one party to the other.

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What is “conspicuous” under California law versus other states—do the rules differ significantly?

California Commercial Code § 1201(b)(10) generally aligns with the UCC’s definition of “conspicuous.” A term is conspicuous if it is written or displayed in a way that a reasonable person ought to notice it. Examples include headings in capitals, bold font, or larger typeface. Other states have similar definitions but may differ in subtle ways—for instance, requiring disclaimers to be set off in a separate paragraph or prefaced with a specific heading.

In all UCC states, the essence is the same: disclaimers must be clearly visible, not hidden among dense text or overshadowed by contradictory statements. Courts apply a fact-specific test to decide if disclaimers are placed and formatted so that an average buyer would be aware of them. Best practice is to exceed the minimum: use an uppercase heading (e.g., “DISCLAIMER OF WARRANTIES”) plus bold, easily legible font, often in a distinct color or offset with whitespace.

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If a consumer sues under a state “Lemon Law,” do disclaimers override statutory protections?

Generally not. State “Lemon Laws” (which typically apply to vehicles or sometimes other consumer goods) usually provide minimum statutory remedies that cannot be waived by private agreement. If disclaimers attempt to limit or eliminate statutory rights to a replacement or refund, courts usually reject them. For instance, under California’s Song-Beverly Consumer Warranty Act (Cal. Civil Code § 1790 et seq.), disclaimers that attempt to deprive consumers of statutory remedies are deemed void.

Businesses selling consumer goods in states with robust Lemon Laws must ensure disclaimers do not conflict with the law’s mandated protections. Even if the disclaimers are otherwise valid, they generally cannot reduce or negate the statutory obligations that require manufacturers or sellers to repair or replace defective goods if they meet certain “lemon” criteria.

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How do disclaimers operate in pilot programs or “proof of concept” deals between companies?

Companies often use pilot programs or proof-of-concept (POC) deals to test software, hardware, or new technologies. In such an arrangement, disclaimers typically specify that the product is untested or under development, clarifying that performance is not guaranteed. These disclaimers can be enforceable in B2B contexts, especially if both parties are sophisticated and have negotiated or acknowledged the disclaimers.

However, if the pilot program leads to actual commercial use beyond the test scope, disclaimers might no longer apply unless the contract expressly states they continue. For instance, if the buyer starts relying on the pilot system for real business operations, but the disclaimers only reference “test environment usage,” the buyer might argue the disclaimers do not apply to subsequent real-world deployment. Hence, disclaimers must clearly define the scope of usage and disclaim any implied warranties even if the pilot stage transitions into production.

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If disclaimers are scattered throughout a lengthy contract, do they remain valid?

Yes, but it can be confusing. Ideally, disclaimers should be consolidated into one clearly titled section like “Disclaimers of Warranties” while referencing them in relevant sections. Courts sometimes look askance at disclaimers sprinkled in fine print across multiple paragraphs. The risk is that they may be deemed inconspicuous or contradictory.

Nevertheless, if each disclaimer is independently conspicuous (using bold or capital letters), or if the contract has cross-references that are easy to follow, disclaimers can still be upheld. Best drafting practice is to have a single, prominent disclaimer section, then cross-reference that section wherever necessary. When disclaimers appear in multiple spots without a unifying heading, a judge or arbitrator might decide it was not adequately “clear” to the buyer, despite the disclaimers existing in multiple forms.

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How does the statute of limitations intersect with disclaimers of warranties?

The statute of limitations for breach of warranty (whether express or implied) under UCC rules is typically four years from the date of breach (see UCC § 2-725). In some cases, disclaimers attempt to shorten this period by stating, for example, “Any warranty claims must be brought within one year.” This is not truly a disclaimer but a limitation-of-actions clause.

Many states allow a contractual shortening of the statute of limitations so long as it is not unreasonably short and does not violate public policy (e.g., disclaimers that reduce the period to a few months for consumers could be invalid). A disclaiming party might combine disclaimers with a shorter limitations period, but the enforceability depends on the reasonableness and clarity of that shortened period. If the disclaimers are otherwise valid, the buyer still has to bring any claims within the newly agreed timeframe—provided it stands up to judicial scrutiny.

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If a court finds a disclaimer invalid, does it invalidate the entire contract?

Not necessarily. Courts often use the doctrine of severability or “blue penciling,” meaning they strike the invalid provision but enforce the rest of the agreement if it can stand independently without the disclaimer. Many contracts include a severability clause stating that if any provision is deemed invalid, the remaining provisions remain in effect.

In the context of disclaimers, if a court rules them unconscionable or contradictory, the disclaimers alone might be voided. The rest of the contract would still bind the parties on issues like price, delivery terms, or other obligations. However, if disclaimers are central to the bargain and removing them fundamentally alters the contract’s nature (e.g., an extremely discounted sale conditioned on no warranties), the court may find the entire contract unenforceable. The outcome depends on how critical disclaimers are to the contract’s structure and whether they can be cleanly severed.

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Are disclaimers from open-source or free software licenses enforceable?

Open-source and free software licenses (e.g., GPL, MIT License, Apache License) typically include disclaimers like “THE SOFTWARE IS PROVIDED ‘AS IS’, WITHOUT WARRANTY OF ANY KIND.” Courts in multiple jurisdictions generally treat these disclaimers as valid, so long as users are on notice. Many open-source licenses require that any distribution of the software maintain the disclaimer. Because open-source software is freely provided, disclaimers serve to limit the developer’s liability if the software is defective or causes unintended consequences.

When courts analyze these disclaimers, they look at whether the user had actual or constructive notice of the license’s terms. If the license is publicly posted and the user acknowledges acceptance, disclaimers are likely enforceable. However, if an intermediary redistributes the software without preserving the disclaimers or fails to inform end users, those disclaimers might be lost or deemed inconspicuous.

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What happens when disclaimers conflict with “minimum quality standards” in an industry?

Industry-specific regulations or recognized minimum standards sometimes override disclaimers. For example, if a certain product must meet FDA, FCC, or other regulatory standards, a disclaimer cannot absolve the seller from ensuring regulatory compliance. Similarly, a “minimum quality standard” recognized by an industry might create an implied expectation that disclaimers cannot wholly negate.

Courts generally do not allow disclaimers to disclaim compliance with mandatory regulations or recognized safety standards. A business can disclaim liability for normal wear and tear or misuse, but disclaimers cannot conflict with laws that impose a duty to meet certain benchmarks. So, disclaiming an implied warranty that a medical device meets baseline FDA requirements would likely be unenforceable. The same logic applies in many highly regulated sectors (aviation, pharmaceuticals, etc.).

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Does a “non-reliance clause” effectively disclaim warranties?

A “non-reliance clause” states that each party is not relying on any representation outside the four corners of the agreement. While such clauses can help avoid certain fraud or misrepresentation claims, they do not necessarily disclaim statutory or implied warranties if the contract remains subject to the UCC or consumer protection laws.

Courts often interpret a non-reliance clause as a method for preventing claims of reliance on extrinsic statements, but it does not disclaim the implied warranties of merchantability or fitness unless the language specifically references those warranties. Also, in consumer contexts, disclaimers of statutory warranties typically require explicit, conspicuous language. Relying solely on a non-reliance clause to disclaim warranties is risky. The better practice is to incorporate a clear warranty disclaimer referencing “merchantability” and “fitness” in addition to a general non-reliance statement.

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Can disclaimers be voided if the seller conceals known product defects?

Yes. Deliberate concealment of known defects can constitute fraud or fraudulent inducement, which disclaimers do not protect against. Courts do not permit disclaimers to shield fraudulent behavior. If the seller knew of major defects and hid them while disclaiming “all warranties,” that disclaimer is likely unenforceable because fraud nullifies the disclaiming party’s attempt to disclaim.

For example, a car dealer who sells a used vehicle “as is” but intentionally conceals the knowledge that the engine is irreparably damaged might face liability for fraud. The “as is” clause can disclaim ordinary implied warranties, but it does not protect a party who deliberately misrepresents or withholds information about known, critical defects. Public policy strongly disfavors disclaimers that facilitate deceptive or fraudulent conduct.

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Are disclaimers of consequential or incidental damages different from disclaimers of warranties?

Yes, disclaiming consequential or incidental damages typically appears in a “Limitation of Liability” clause, rather than a “Disclaimer of Warranties” section. Courts often treat each differently. Even if a party successfully disclaims all warranties, that does not automatically disclaim liability for consequential damages unless specifically stated.

For instance, a contract might say: “IN NO EVENT SHALL SELLER BE LIABLE FOR ANY INDIRECT, CONSEQUENTIAL, OR INCIDENTAL DAMAGES.” That aims to prevent claims for lost profits, downtime, or other chain-reaction damages. Meanwhile, disclaiming warranties addresses the nature and quality of the product or service. The two disclaimers often go hand-in-hand but serve distinct purposes. If the disclaimers are not clearly or separately articulated, a court might refuse to interpret one type of disclaimer as covering the other.

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Does disclaiming warranties remove the need for a separate “as is” clause?

“As is” language is one recognized way to disclaim implied warranties, but disclaimers can be phrased in other ways so long as they are conspicuous and specifically mention “merchantability” or “fitness.” Including “as is” can strengthen a disclaimer because it is widely recognized as disclaiming implied warranties. However, you do not absolutely need those exact words if you have a robust, properly formatted disclaimer referencing the key warranties by name.

That said, the simplest approach is typically: “THE PRODUCTS ARE PROVIDED ‘AS IS’ AND SELLER DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.” Coupling “as is” with explicit references to the implied warranties is often the clearest route. If you omit “as is,” you must still be sure your disclaimers plainly inform the buyer that no implied warranties exist.

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In a multi-year contract, do disclaimers remain effective for each renewal period?

They generally do if the contract is continuous and the disclaimers remain part of the controlling agreement. Many multi-year contracts auto-renew unless canceled. If disclaimers are in the initial master agreement and that agreement remains in force, the disclaimers typically continue unless the new renewal document modifies them. If the parties sign an entirely new agreement at renewal, disclaimers must be included or reaffirmed in that new version.

In subscription-based or SaaS models, disclaimers often state: “These disclaimers apply to any renewal terms or extended usage of the services.” A business can also incorporate disclaimers into each renewal invoice or click-through acceptance to reinforce them. If a new agreement omits disclaimers or significantly changes them, a buyer might argue the disclaimers no longer apply to the renewed period.

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What disclaimers do businesses commonly overlook that they should include?

1. Data Loss or Security: Especially for tech companies or SaaS providers, disclaiming implied warranties about uninterrupted service or data integrity is crucial. Otherwise, a user might claim an implied warranty that the software was secure.
2. Compatibility or Integration: Vendors often forget to disclaim warranties that their software will integrate seamlessly with a user’s existing systems or third-party software.
3. Performance Benchmarks: If the marketing does not promise a certain performance level, disclaim disclaimers about general performance, speed, or accuracy.
4. Non-Infringement: Businesses sometimes fail to disclaim an implied warranty that the product does not infringe third-party IP. While disclaimers of non-infringement are tricky, a clear statement that “no warranty is given about IP or patent non-infringement” can help—though many buyers will request an indemnity for IP claims, effectively superseding such disclaimers.

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If disclaimers appear in user manuals or support documentation but not in the signed contract, do they still apply?

They can, depending on whether the contract incorporates those materials by reference or the buyer is clearly informed that disclaimers in ancillary documents govern. If the buyer never received or agreed to the user manual at the time of contract, disclaimers buried there may be unenforceable. Incorporation by reference typically requires that the contract say something like: “All product usage is subject to disclaimers found in the user manual, which is hereby incorporated.” The user manual should be provided before or at the time of sale.

If a buyer obtains a user manual after the sale, disclaimers in it usually do not retroactively bind them. Courts look at the timing and whether the buyer had a fair opportunity to review disclaimers before finalizing the purchase. If they did, and the user manual disclaimers were clearly referenced, those disclaimers could be upheld despite not being in the main contract body.

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Can disclaimers ever help a business avoid product recalls or regulatory enforcement?

Disclaimers typically do not exempt a company from regulatory obligations like product safety standards or recall requirements. If a product is unsafe or violates a federal agency’s rules (for instance, the Consumer Product Safety Commission, the FDA for medical devices, or the NHTSA for vehicles), disclaimers cannot override the regulatory or statutory duty to initiate a recall. Government enforcement actions usually operate outside the scope of private contract disclaimers.

Thus, disclaimers might protect a business from contract-based or warranty-based claims, but they do not shield the business from government-imposed obligations related to public safety or compliance. Even if the product is labeled “as is,” if it poses a significant hazard, an agency can force a recall, impose fines, or otherwise hold the company liable, disclaimers notwithstanding.

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