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An "as is" disclaimer of warranties does not bar an action for deceptive trade practices.
In September 1985 Mack’s Used Cars sold to Morris a vehicle described on the bill of sale as a 1979 Ford pickup truck. An older truck was traded in as a down payment, and the balance of the purchase price was financed over term of three years with a retail installment contract and security agreement, pursuant to which the certificate of title was delivered by the defendant-seller directly to the lender. The bill of sale contained the following statement immediately above the Morris’ signature, "This unit sold as is. No warranties have been expressed or implied." At the time of sale, the truck had been wrecked or dismantled and was a "reconstructed" vehicle within the meaning of Title 55, Chapter 3, Part 2 of Tennessee Code Annotated. Mack’s knew but did not disclose to Morris that the pickup was a reconstructed vehicle. Morris obtained this information three years later when he received the certificate of title after paying the final installment on the sales contract. Being reconstructed reduced the vehicle's fair market value 30 to 50 percent. Thus, Morris sued Mack’s for compensatory, treble, and punitive damages, alleging fraudulent concealment, breach of express warranty of title, breach of express warranty of description, breach of implied warranty of merchantability, and violation of the Tennessee Consumer Protection Act forbidding unfair or deceptive acts. Mack’s defense was that the disclaimer contained in the bill of sale avoided any liability for its not disclosing to Morris the condition of the vehicle as revealed by the certificate of title. The trial court agreed with Mack’s and dismissed the suit. On appeal of the count charging violation of the Consumer Protection Act, the Court of Appeals affirmed.
Did the disclaimer of warranties in the bill of sale bar Morris from filing suit against Mack’s?
The trial court and the Court of Appeals misconstrued these statutes as they relate to the Consumer Protection Act. Disclaimers permitted by § 47-2-316 of the Uniform Commercial Code (UCC) may limit or modify liability otherwise imposed by the code, but such disclaimers do not defeat separate causes of action for unfair or deceptive acts or practices under the Consumer Protection Act. In Attaway v. Tom’s Auto Sales, Inc., the buyer of a used car brought suit against the seller, alleging breach of warranty and violation of the Georgia Fair Business Practices Act (Act). The sales contract provided "all cars sold as is . . . no guarantee." The court stated that "the language in the contract would appear to prevent [the buyer] from recovering on the grounds of express or implied warranty" and concluded that "although [the buyer] might not be able to rescind the contract or otherwise set it aside, the Act itself is in no way tied to contractual rights and is wholly self-sustaining." The court concluded, “From an overview of [the Act], we find that there is thereby created a separate and distinct cause of action under its provisions. A consumer who is damaged thereby has an independent right to recover under the Act, regardless of any other theory of recovery.” The Tennessee Consumer Protection Act is to be liberally construed to protect consumers and others from those who engage in deceptive acts or practices. In a case similar to the one before the Court, the seller's failure to disclose to the buyer that the vehicle had been in an accident and had been repaired constituted a violation of the Consumer Protection Act. To allow the seller here to avoid liability for unfair or deceptive acts or practices by disclaiming contractual warranties under the UCC would contravene the broad remedial intent of the Consumer Protection Act. In summary, disclaimers permitted by T.C.A. § 47-2-316 do not prevent application of the Consumer Protection Act. The Consumer Protection Act creates a separate and distinct cause of action for unfair or deceptive acts or practices.