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As Is Clauses: A weak defense to automobile fraud and unsafe cars

Many car dealerships refuse to help buyers with serious problems such as a bad transmission, defective engine or accident damage because the car was sold "As-Is", even if the car was recently purchased. While an As-Is clause is usually considered by dealerships to be the ultimate defense to liability for selling a bad car, there are numerous exceptions that give car buyers a remedy against dealerships even with cars sold As-Is.

A vehicle sold "As-Is" has language on the window sticker or other documents stating that the vehicle is sold with all disclosed and undisclosed faults and the seller has no liability for those faults. An "As-Is" clause is simply an attempt to waive the implied warranty of merchantability.

To comply with the implied warranty of merchantability, a vehicle must provide safe, reliable travel and be substantially free of defects at the time of the sale. A dealership can disclaim or exclude the implied warranty of merchantability from applying to a purchase. If the implied warranty of merchantability applies to a vehicle, then a purchaser can recover if the vehicle was sold with defects or was not in a condition to provide safe, reliable travel. If the implied warranty of merchantability does not apply because it was properly disclaimed, then a dealer is not liable even if the vehicle was sold with defects.

West Virginia has the strongest means of defeating As-Is clauses. Under West Virginia law, disclaimer of the implied warranty of merchantability is prohibited. This means that in West Virginia, As-Is clauses have no effect and are meaningless.

Pennsylvania, like many other jurisdictions, does permit disclaimer of the implied warranty of merchantability, but there are still many ways to defeat an As-Is clause. The federal Magnuson-Moss Warranty Act prevents the disclaimer of the implied warranty of merchantability if the seller or supplier makes a written warranty or enters into a service contract with the consumer. If a car has a warranty from a manufacturer, then an As-Is clause fails against the manufacturer and the purchaser can sue the manufacturer for defects with the car. The drawback here is that the Magnuson Moss Warranty Act usually only prevents disclaimer as to the warrantor, so an As-Is clause could still be effective against the car dealer if the only warranty was provided by the car manufacturer.

As-Is clauses will not protect a dealership from claims of fraud. A dealership cannot avoid liability for intentionally failing to disclose a serious problem with a vehicle by hiding behind an As-Is clause.

The Pennsylvania Automotive Industry Trade Practices regulations provide guidelines for As-Is clauses. To waive the implied warranty of merchantability, a dealership in Pennsylvania must provide specific and conspicuous language on both a window sticker on the car and the written contract for sale. If a dealership has an As-Is clause on the window sticker, but not in the written contract or vice versa, then the As-Is clause is not enforceable.

The Automotive Industry Trade Practices regulations also require disclosure if the dealership knows or should know that a vehicle's frame is bent, the engine block or head is cracked, the vehicle cannot pass state inspection, the vehicle is flood damaged or the differential or transmission requires replacement. An As-Is clause is will not be a valid defense if the dealership knows or should have known any of these conditions existed in the vehicle.

The commonly-held belief that an As-Is clause completely protects a dealership from liability for problems with a vehicle at the time of sale is simply not true. Consumers in Pennsylvania and West Virginia have many options available to recover against a dealership for the sale of a bad car, even with an As-Is clause. If you believe that a vehicle you purchased was misrepresented or had substantial defects at the time of the sale, contact Attorney Christina Gill Roseman at 800-745-5259 to find out your rights under the law.

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