In determining as a matter of law the effectiveness of a warranty disclaimer, the court of appeals holds that the primary focus is on whether a reasonable person ought to have noticed it, taking into account the guideline language of Mich. Comp. Laws § 440.1201(10) (Mich. Stat. Ann. § 19.1201(10)), as well as any other circumstances that protect the buyer from surprise.
Plaintiff insurer brought a subrogation action against defendant seller in the Ingham Circuit Court (Michigan), alleging breach of implied warranties. The insurer claimed the seller had not effectively disclaimed all implied warranties because the "as is" clause was not conspicuous as required in U.C.C. § 2-316(2). The seller filed a motion for summary judgment alleging a disclaimer on the work order and invoice operated to disclaim all implied warranties. The trial court granted the seller's motion. The insurer appealed.
Did the defendant effectively disclaim all implied warranties with the "as is" clause in the purchase order and invoice?
The judgment of the trial court that the warranty disclaimer was effective was affirmed. The court held that "as is" language had to be conspicuous and that the disclaimer was effective. There was a split of opinion regarding the interpretation of U.C.C. § 2-316(3)(a) because it did not specifically mention the concept of conspicuousness. The court found it made no sense to require conspicuous language when language such as "there are no warranties which extend beyond the description on the face hereof" was used and not for an "as is" clause. Even an inconspicuous disclaimer would be given effect, however, where other circumstances existed to protect the buyer from surprise. Because the insured was a sophisticated buyer, the "as is" disclaimer was in all capital letters, and the disclaimer was located on the front of the invoice and in the work order and not buried in a lengthy document or fine print, a reasonable person should have noticed the "as is" disclaimer and it was held to be effective.