Disclaimers in contracts are generally included when one party wants to sell a product or service without any guarantee of its quality (merchantability) or suitability for the buyer’s intended use. Guarantees of a product’s quality or suitability are also known as warranties, and may be implied in the parties’ agreement without being written or spoken—usually by virtue of a state’s statutes adopting the Uniform Commercial Code’s provisions governing the sale of goods (Article 2)—or by court opinions (also known as common law or case law). Some states have laws (statutes) that prohibit the disclaimer of warranties; make disclaimers ineffective; and penalize parties who attempt to disclaim such warranties. Disclaimers in contracts also serve as an explicit warning to the parties of the risks in a sale or transaction and help avoid a subsequent claim that a party was unaware of such risks or was deceived regarding the presence of such risks.
In Texas, disclaimers in contracts are subject to both the Texas Business and Commerce Code, which adopts provisions similar to the Uniform Commercial Code (UCC), and relevant case law. Under Texas law, particularly the UCC Article 2 as adopted in Texas, sellers can disclaim warranties, including the warranty of merchantability and the warranty of fitness for a particular purpose, but such disclaimers must be conspicuous and in writing. The language used must be specific, and in the case of the warranty of merchantability, the word 'merchantability' must be mentioned. If a disclaimer of the warranty of fitness for a particular purpose is to be effective, it must be in writing and conspicuous. Texas law allows for the disclaimer of implied warranties but requires clear communication to the buyer. Disclaimers serve to inform the buyer of the risks and limit the seller's liability, but they must be crafted in accordance with the law to be enforceable. It is important for parties to understand the legal requirements for disclaimers to ensure they are not inadvertently creating warranties or failing to effectively disclaim them.
