Defining AS-IS Clause and Express and Implied Warranties

From Catanese & Wells Blog

You’ve seen the term “As-Is.” Everything from cars, houses, even items on eBay use the term when making a sale. The phrase seems self explanatory – that the buyer is accepting the item “with all faults” – however, be forewarned, this is not always the case. As many an equine attorney will tell you, if you purchase a horse and later discover a pre-existing condition the seller failed to disclose this is fraud and the buyer may have ample grounds to file a suit – even if an “As-Is” clause exists in the sales contract.

It goes without saying the purchase of a horse should never be done without a written contract. Moreover, you’ll need more than a simple “As-Is” clause in your horse sales contract.

When buying or selling a horse, an equine attorney can be vital in assisting in scripting the details when it comes to “As-Is” clauses and warranties. There are generally two types of warranties written into horse sales contracts: express or implied. As a general rule of thumb, a buyer will want as many express and implied warranties written into a sales contract, a seller should seek to limit express warranties and to exclude implied warranties.

Express Warranties

Express warranties are those which are detailed by the parties in the sales agreement. They often include facts such as the horse’s lineage, show or jumping history and health. It will be to the buyer’s advantage to include as many express warranties written into the sales contract as is reasonable. This helps to better protect the buyer from any later possible surprises.

An additional way to keep surprises at bay is to conduct a pre-purchase examination with an independent veterinarian. Be sure to have the examination include x-rays and blood work, which can unearth pre-existing conditions and medications that can go undetected during a basic assessment which might only reveal visible or observable defects.

Implied Warranties

There are two types of implied warranties – merchantability and fitness. An implied warranty of merchantability is an unwritten and unspoken guarantee that the horse purchased conforms to ordinary standards of care and that they are of the same average grade, quality and value as similar horses sold under similar circumstances. The warranty of fitness for a particular purpose is implied when a buyer relies on the seller to fit a specific request. For example, if a buyer purchases a horse with the explicit intention of breeding and the horse is incapable of breeding, the buyer may be entitled to an implied warranty of fitness.

There are a number of requirements that must be met for a court to imply a warranty of fitness, just as there are a series of circumstances that must exist in order to imply a warranty of merchantability. An equine law firm can help determine if a breach of implied or express warranty has taken place, as is accordance with the Uniform Commercial Code (UCC) under which horses are sold in most states.