“As is”: Overview, definition and example
What is "as is"?
The term "as is" in contracts refers to a clause that means the buyer or recipient accepts the item, product, or service in its current condition, with no guarantees or warranties from the seller. This means the seller is not responsible for any defects, flaws, or problems that the buyer might discover after the agreement is made. Essentially, the buyer takes full responsibility for the item as it stands at the time of the transaction.
Why is "as is" important?
The "as is" clause is important because it protects sellers from being held liable for the condition of the item after the sale. For buyers, it’s a signal to carefully inspect what they’re purchasing before agreeing to the terms since they cannot hold the seller accountable for defects or issues later.
This clause is commonly used in sales of real estate, vehicles, and second-hand goods, where items are often sold in varied conditions. It emphasizes that buyers must do their due diligence to avoid surprises, while sellers are shielded from potential disputes about quality or performance after the deal is finalized.
Understanding "as is" through an example
Imagine a business purchasing a used delivery van from another company. The contract includes an "as is" clause, meaning the buyer agrees to take the van in its current condition with no guarantees about its performance or quality. After completing the purchase, the buyer notices the brakes need repair and the tires are worn. Because of the "as is" clause, the seller has no obligation to address these issues or provide a refund.
For the buyer, this highlights the importance of inspecting the van thoroughly before signing the agreement. For the seller, the clause ensures they are not held responsible for any issues discovered after the sale.
An example of an "as is" clause
Here’s an example of how an "as is" clause might appear in a contract:
“The Buyer acknowledges and agrees that the Goods are being sold ‘as is’ and ‘with all faults.’ The Seller makes no warranties, express or implied, including but not limited to warranties of merchantability or fitness for a particular purpose. The Buyer assumes all risks related to the condition of the Goods.”
Conclusion
The "as is" clause is a straightforward but crucial part of many contracts, clearly defining the responsibilities of both parties. For sellers, it provides protection against future disputes over the condition of what they’re selling. For buyers, it stresses the need for careful inspection and evaluation before agreeing to the terms.
Whether you’re selling or buying, understanding how an "as is" clause works ensures both sides know their responsibilities and reduces the risk of misunderstandings. It’s a simple way to make sure the agreement is clear and fair for everyone involved.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.