Warranty Disclaimer

TL;DR: The warranty disclaimer is the clause that determines whether your client is buying a product with a safety net or jumping without a parachute. It is also one of the most technically demanding provisions to draft correctly - get the magic words wrong, the formatting wrong, or the statutory interaction wrong, and the disclaimer may be void, leaving the seller exposed to warranty claims it thought it had eliminated. The UCC requires conspicuousness. The Magnuson-Moss Act prohibits disclaiming implied warranties on consumer products that carry written warranties. State consumer protection statutes may override your carefully drafted language entirely. And the distinction between a warranty disclaimer and a representation disclaimer is a trap that catches even experienced practitioners. If you draft or review warranty disclaimers, you need to know precisely where the enforceability lines are - because your counterparty certainly will when something goes wrong.

What Is a Warranty Disclaimer?

A warranty disclaimer is a contractual provision by which a seller, licensor, or service provider limits or eliminates the warranties - particularly implied warranties - that would otherwise apply to the transaction by operation of law. The clause typically addresses the implied warranty of merchantability (the product is fit for ordinary use), the implied warranty of fitness for a particular purpose (the product is suitable for the buyer's specific intended use), and, in some contexts, the implied warranty of title and non-infringement.

The most common form of warranty disclaimer is the "as is" clause, which communicates that the buyer is accepting the goods, software, property, or services in their present condition without any warranty regarding their quality, condition, or suitability. In software transactions, the disclaimer often takes the form of the familiar all-caps block: "THE SOFTWARE IS PROVIDED 'AS IS' WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT."

Warranty disclaimers operate in a complex regulatory landscape. Under the Uniform Commercial Code (UCC), which governs the sale of goods in the United States, implied warranties arise automatically and can only be disclaimed through specific statutory language and formatting requirements. The Magnuson-Moss Warranty Act adds a federal overlay for consumer products. State consumer protection statutes - such as the Song-Beverly Consumer Warranty Act in California - may further restrict or prohibit warranty disclaimers in consumer transactions. In the UK, the Consumer Rights Act 2015 renders most warranty disclaimers in consumer contracts unenforceable, while the Unfair Contract Terms Act 1977 applies a reasonableness test in B2B contexts.

It is critical to distinguish warranty disclaimers from several related but distinct concepts. Limitation of liability clauses cap the amount of damages recoverable, but do not eliminate the underlying warranty. Limitation of remedy clauses restrict the types of remedies available (e.g., repair or replace only) while leaving the warranty intact. And disclaimers of representations address pre-contractual statements of fact, which may give rise to misrepresentation claims that survive a warranty disclaimer.

Why It Matters

• Risk allocation: Without a warranty disclaimer, the seller is exposed to claims based on implied warranties that arise by operation of law - regardless of what the seller actually promised. A buyer who discovers that the product does not perform as expected may have a warranty claim even if the seller never made any specific performance commitments. The disclaimer shifts this risk to the buyer.
• Enforceability complexity: Warranty disclaimers are among the most heavily regulated contractual provisions. The drafting requirements are formalistic - wrong words, wrong font size, or wrong placement can void the entire disclaimer. This makes the clause both critically important and technically demanding.
• "As is" in high-stakes transactions: In M&A, real estate, and used equipment sales, the "as is" disclaimer is the seller's primary defense against post-closing warranty claims. But courts have developed significant exceptions - fraud, concealment, latent defects, and environmental contamination, among others - that limit the effectiveness of even a well-drafted "as is" clause.
• Software and SaaS: In technology transactions, the warranty disclaimer has become almost reflexive - virtually every software license and SaaS agreement includes one. But the enforceability of warranty disclaimers for software remains unsettled in many jurisdictions because software does not fit neatly into the UCC's "goods" framework, and courts disagree about whether Article 2 applies to software licenses.
• Insurance interaction: Warranty disclaimers affect the insurer's subrogation rights and the buyer's ability to recover losses under product liability policies. The disclaimer may also interact with the seller's errors and omissions (E&O) or professional liability coverage, potentially affecting the availability of insurance proceeds.

Key Elements of a Well-Drafted Warranty Disclaimer

1. Identification of disclaimed warranties: Specifically identify each implied warranty being disclaimed - merchantability, fitness for a particular purpose, title, non-infringement, and any other warranties implied by law, custom, or course of dealing. Generic language ("all warranties, express or implied") should be paired with specific enumeration for maximum enforceability.
2. UCC-compliant language: Under UCC § 2-316(2), to disclaim the implied warranty of merchantability, the disclaimer must mention "merchantability" by name. To disclaim fitness for a particular purpose, the disclaimer must be in writing and conspicuous. The word "as is" or "with all faults" is sufficient to disclaim all implied warranties under UCC § 2-316(3)(a), but best practice is to use this language in addition to the specific disclaimers.
3. Conspicuousness: The UCC requires that warranty disclaimers be "conspicuous" - meaning they must be presented in a way that a reasonable person would notice them. Courts have accepted all-caps text, bold text, larger font size, contrasting color, and separate signature blocks as sufficient. All-caps remains the safest approach for commercial contracts, though it is worth noting that courts occasionally scrutinize whether a wall of all-caps text is actually conspicuous or merely unreadable.
4. Separation from express warranties: If the contract contains express warranties (e.g., the software will perform in substantial conformance with the documentation for 12 months), the disclaimer must clearly identify which warranties are being disclaimed (implied) and which are being provided (express). A blanket disclaimer that purports to eliminate all warranties - including the express warranties stated three paragraphs above - creates an internal contradiction that courts will resolve against the drafter.
5. Carve-outs and preserved warranties: Many commercial contracts disclaim implied warranties but provide limited express warranties in their place - such as a warranty of conformance to specifications, a warranty against defects in materials and workmanship, or a warranty of title. The disclaimer should explicitly preserve these express warranties while eliminating the implied ones.
6. Integration with limitation of remedy: Pair the warranty disclaimer with a limitation of remedy clause that specifies the buyer's exclusive remedy for any warranty that survives the disclaimer (typically repair, replacement, or a refund). Under UCC § 2-719, if the limited remedy fails of its essential purpose (e.g., the seller cannot repair the defect after multiple attempts), the buyer may be entitled to all remedies available under the UCC, potentially including consequential damages - which is why the consequential damages exclusion should be drafted as an independent provision.
7. Statutory compliance carve-out: Include a savings clause acknowledging that the disclaimer is effective only to the extent permitted by applicable law. This does not save an otherwise unenforceable disclaimer, but it prevents a court from voiding the entire provision (rather than just the unenforceable portion) and demonstrates the drafter's intent to comply with statutory requirements.

Market Position & Benchmarks

Where Does Your Clause Fall?

• Broad Disclaimer (Seller-Favorable): Full "as is" disclaimer of all implied warranties with no express warranties of any kind. Common in used equipment sales, distressed asset transactions, and open-source software licenses. The buyer accepts all risk and is expected to conduct its own due diligence.
• Market Standard: Disclaimer of implied warranties of merchantability and fitness for a particular purpose, paired with limited express warranties (conformance to specifications, defect-free for a stated period, title and non-infringement). An exclusive remedy of repair, replacement, or refund. A separate consequential damages exclusion. This is the predominant structure in enterprise software, SaaS, and commercial equipment sales.
• Narrow Disclaimer (Buyer-Favorable): Disclaimer limited to fitness for a particular purpose only, with merchantability and non-infringement warranties preserved. Broader express warranties covering performance levels, uptime, security standards, and compliance. Higher liability caps or uncapped liability for warranty breaches. Common in mission-critical technology deployments and heavily negotiated enterprise agreements.

Market Data

• Approximately 95% of commercial software license and SaaS agreements contain a disclaimer of implied warranties, making it one of the most ubiquitous contract provisions in the technology sector.
• In surveyed enterprise SaaS agreements, roughly 70% include express warranties of conformance to specifications and non-infringement despite disclaiming other implied warranties.
• All-caps formatting for warranty disclaimers appears in approximately 85% of US commercial contracts, though a growing minority (roughly 15%) use bold text or separate signature acknowledgment as alternatives.
• In M&A transactions, "as is" clauses appear in approximately 40% of asset purchase agreements and 25% of stock purchase agreements, with the remainder relying on specific representations and warranties with survival and indemnification mechanics.
• Courts have voided warranty disclaimers for lack of conspicuousness in roughly 10-15% of reported cases where conspicuousness was contested, most commonly when the disclaimer was buried in dense terms and conditions or presented in the same font and format as surrounding text.

Sample Language by Position

Seller/Vendor-Favorable: "THE PRODUCT IS PROVIDED 'AS IS' AND 'WITH ALL FAULTS.' SELLER MAKES NO WARRANTIES, REPRESENTATIONS, OR CONDITIONS OF ANY KIND, WHETHER EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, AND NON-INFRINGEMENT. SELLER DOES NOT WARRANT THAT THE PRODUCT WILL MEET BUYER'S REQUIREMENTS, THAT THE OPERATION OF THE PRODUCT WILL BE UNINTERRUPTED OR ERROR-FREE, OR THAT DEFECTS IN THE PRODUCT WILL BE CORRECTED. THE ENTIRE RISK AS TO THE QUALITY AND PERFORMANCE OF THE PRODUCT IS WITH BUYER."

Market Standard: "EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN SECTION 8.1, VENDOR DISCLAIMS ALL WARRANTIES, WHETHER EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT. VENDOR DOES NOT WARRANT THAT THE SERVICE WILL BE UNINTERRUPTED OR ERROR-FREE. The foregoing disclaimer shall not apply to the extent prohibited by applicable law, in which case Vendor's warranty shall be limited to the minimum scope and duration permitted by such law."

Buyer/Customer-Favorable: "Vendor disclaims the implied warranty of fitness for a particular purpose. All other implied warranties, including the implied warranty of merchantability and the implied warranty of non-infringement, remain in full force and effect. Nothing in this Section limits or qualifies the express warranties set forth in Sections 8.1 through 8.4 or Vendor's obligations under the Service Level Agreement attached as Exhibit B. For the avoidance of doubt, the warranty disclaimer in this Section does not apply to Vendor's representations in Section 7, which shall survive in accordance with Section 12.3."

Example Clause Language

Software License Agreement: "Licensor warrants that, for a period of 90 days from the date of delivery (the 'Warranty Period'), the Software will perform in substantial conformance with the Documentation. Licensor's sole obligation and Licensee's exclusive remedy for breach of this warranty shall be, at Licensor's option, to (a) correct the non-conformance, (b) replace the Software, or (c) refund the license fees paid for the non-conforming Software. EXCEPT FOR THE EXPRESS WARRANTY SET FORTH IN THIS SECTION, THE SOFTWARE IS PROVIDED 'AS IS' AND LICENSOR DISCLAIMS ALL OTHER WARRANTIES, WHETHER EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, AND NON-INFRINGEMENT. LICENSOR DOES NOT WARRANT THAT THE SOFTWARE WILL OPERATE WITHOUT INTERRUPTION OR ERROR, OR THAT ALL DEFECTS WILL BE CORRECTED."

Real Estate Purchase Agreement: "Buyer acknowledges and agrees that Buyer is purchasing the Property in its present 'AS IS, WHERE IS, WITH ALL FAULTS' condition and without any warranties, representations, or guarantees, either express or implied, of any kind, nature, or type whatsoever from or on behalf of Seller, including without limitation any warranties or representations as to the physical condition of the Property, the environmental condition of the Property, the suitability of the Property for any particular use, compliance of the Property with applicable laws, zoning, or building codes, or the accuracy of any information provided by Seller regarding the Property. Buyer acknowledges that Buyer has conducted or has had the opportunity to conduct such inspections and investigations of the Property as Buyer deems necessary and is relying solely upon Buyer's own inspections, investigations, and analyses in entering into this Agreement. Notwithstanding the foregoing, nothing in this Section shall relieve Seller of liability for fraud or intentional misrepresentation."

Equipment Sale Agreement: "Seller warrants that the Equipment shall be free from defects in materials and workmanship under normal use and service for a period of 12 months from the date of delivery (the 'Warranty Period'). Seller further warrants that it has good title to the Equipment, free and clear of all liens and encumbrances. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN THIS SECTION 9, SELLER MAKES NO OTHER WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, AND SPECIFICALLY DISCLAIMS THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. Buyer's exclusive remedy for breach of the express warranty shall be repair or replacement of the defective Equipment, at Seller's sole option, provided that Buyer notifies Seller in writing of the defect within the Warranty Period and returns the Equipment to Seller's facility at Buyer's expense."

Common Contract Types

• Software license and SaaS agreements. The disclaimer eliminates implied warranties of merchantability and fitness for a particular purpose, shifting the risk of software defects and performance shortfalls to the licensee while the vendor typically provides a narrow express warranty of conformance to documentation.
• Open-source software licenses. Nearly all open-source licenses include a blanket "as is" disclaimer because the distributed contributor model makes it impractical for any single party to warrant the software's quality, security, or fitness for any use.
• Real estate purchase and sale agreements. The "as is, where is, with all faults" disclaimer requires the buyer to rely solely on its own inspections and due diligence, protecting the seller from post-closing claims about property condition, environmental contamination, or code compliance.
• Equipment sale and lease agreements. The disclaimer limits the seller's exposure on used or refurbished equipment by eliminating implied warranties, typically paired with a time-limited express warranty covering defects in materials and workmanship.
• Used goods and surplus asset sales. Full "as is" disclaimers are standard because the seller often has limited knowledge of the goods' condition and history, and the pricing reflects the buyer's assumption of all quality risk.
• M&A asset purchase agreements. The disclaimer prevents the buyer from asserting implied warranty claims regarding acquired assets, channeling post-closing protection instead through negotiated representations, warranties, and indemnification provisions with defined survival periods.
• Professional services and consulting agreements. The disclaimer addresses implied warranties regarding the quality or results of professional work, while the provider typically warrants that services will be performed in a workmanlike manner consistent with industry standards.
• Technology integration and implementation agreements. The disclaimer limits vendor liability for system compatibility and performance issues arising from the customer's existing environment, while preserving express warranties that the delivered solution will meet agreed-upon specifications.
• Distribution and reseller agreements. The manufacturer disclaims implied warranties to the distributor, who then passes through the disclaimer to end customers, creating a chain of "as is" provisions that concentrate warranty obligations at the point of manufacture.
• Construction contracts (regarding materials and installed equipment). The disclaimer shifts responsibility for material quality and equipment performance to the buyer or subcontractor, though it is often limited by building codes, statutory warranties on new construction, and implied warranties of habitability.
• API and data licensing agreements. The disclaimer protects the data provider from claims about data accuracy, completeness, or fitness for the licensee's analytical or operational purposes, placing the burden on the licensee to validate data quality for its specific use case.

Negotiation Playbook

Key Drafting Notes

• Always mention "merchantability" by name: Under UCC § 2-316(2), the implied warranty of merchantability can only be disclaimed by language that specifically mentions the word "merchantability." A generic disclaimer of "all implied warranties" without using this specific word may be insufficient. This is one of the most basic drafting requirements, yet it is still missed in practice.
• Make it genuinely conspicuous: Courts apply a fact-specific inquiry into conspicuousness. All-caps is the convention, but if your entire contract is in all-caps (as some click-wrap terms are), the disclaimer is no more conspicuous than the rest. Consider using bold text, a larger font, a contrasting background, or a separate acknowledgment checkbox to ensure the disclaimer stands out.
• Separate the disclaimer from representations: A warranty disclaimer does not automatically disclaim representations. If the seller has made pre-contractual representations about the product's capabilities, the buyer may have a misrepresentation claim that survives the warranty disclaimer. Address representations separately, either through an integration clause or an express disclaimer of reliance on extra-contractual statements.
• Coordinate with the limitation of remedy: The warranty disclaimer and the limitation of remedy are complementary but distinct provisions. The disclaimer eliminates warranties; the limitation of remedy restricts the consequences of warranties that survive. Draft both with reference to the other, and ensure the limitation of remedy includes a "failure of essential purpose" savings clause that preserves the consequential damages exclusion even if the limited remedy fails.
• Consider the Magnuson-Moss trap: If the seller provides a written warranty on a consumer product, the Magnuson-Moss Warranty Act prohibits disclaiming implied warranties. Many sellers are unaware that their marketing materials, packaging, or website representations may constitute a "written warranty" under the Act, inadvertently triggering this prohibition.

Common Pitfalls

• Internal contradiction with express warranties: A contract that provides express warranties in Section 8 and then disclaims "all warranties, express or implied" in Section 9 creates a contradiction that courts will typically resolve in favor of the buyer. The disclaimer should expressly exclude the express warranties from its scope.
• Failure to address course of dealing: Under UCC § 2-316(3)(c), implied warranties can arise from course of dealing, course of performance, or usage of trade. A disclaimer that addresses only merchantability and fitness for a particular purpose may not cover these other implied warranties. Include course-of-dealing and usage-of-trade warranties in the disclaimer.
• Relying on "as is" alone: While "as is" language is broadly effective under UCC § 2-316(3)(a), some courts have required additional language to disclaim specific warranties, particularly in consumer transactions. Best practice is to use "as is" in conjunction with, not instead of, specific warranty disclaimers.
• Ignoring non-UCC warranties: The UCC is not the only source of implied warranties. The Computer Fraud and Abuse Act, the Lanham Act, state consumer protection statutes, and common law fraud and negligent misrepresentation doctrines may all provide warranty-like protections that survive a UCC-compliant disclaimer. Draft the disclaimer to address warranties "whether arising under the UCC, common law, statute, or otherwise."
• Overlooking pre-contractual statements: Sales presentations, demos, proposals, and email exchanges often contain statements about product capabilities that may constitute express warranties or actionable representations - regardless of what the contract says. The contract should include a comprehensive integration clause and a disclaimer of reliance on extra-contractual statements to minimize this risk.

Jurisdiction Notes

United States: Warranty disclaimer law in the US is governed primarily by UCC Article 2 (for goods), with significant overlays from the Magnuson-Moss Warranty Act (for consumer products with written warranties), the FTC's Rule on Pre-Sale Availability of Written Warranty Terms, and state consumer protection statutes. The UCC's requirements under § 2-316 - mentioning "merchantability," conspicuousness, and the "as is" safe harbor - are well-established but heavily litigated. Key variations exist among states: some states (e.g., Mississippi, Kansas, West Virginia) prohibit the disclaimer of implied warranties in consumer transactions by statute, regardless of how the disclaimer is drafted. In software transactions, the applicability of UCC Article 2 to software licenses (as opposed to software sold as goods) remains unsettled, with courts in different jurisdictions reaching different conclusions. The proposed Uniform Computer Information Transactions Act (UCITA), which would have created a comprehensive framework for software warranties, was adopted by only two states (Maryland and Virginia) before the project was withdrawn.

United Kingdom: English law takes a significantly more restrictive approach to warranty disclaimers than the US. In consumer contracts, the Consumer Rights Act 2015 (CRA) renders most attempts to exclude or restrict implied terms (including satisfactory quality, fitness for purpose, and conformity with description) unenforceable. Traders cannot contract out of these statutory protections, and any attempt to do so is void. In B2B contracts, the Unfair Contract Terms Act 1977 (UCTA) subjects exclusion clauses to a "reasonableness" test - the clause is enforceable only if it was a fair and reasonable term to include, having regard to the circumstances known or contemplated by the parties at the time of contracting. Factors relevant to reasonableness include the relative bargaining power of the parties, whether the buyer received an inducement to accept the clause, and whether the buyer knew or should have known of the exclusion. The Sale of Goods Act 1979, as amended, implies warranties of satisfactory quality and fitness for purpose that can be excluded in B2B contracts only if the exclusion satisfies the UCTA reasonableness test. In practice, broad "as is" disclaimers that are routinely enforced in US commercial contracts may be unenforceable in the UK even between sophisticated commercial parties.

European Union and Civil Law Jurisdictions: EU consumer protection directives - particularly the Consumer Sales Directive (1999/44/EC, replaced by the Sale of Goods Directive 2019/771) and the Digital Content Directive (2019/770) - establish mandatory warranty protections for consumers that cannot be disclaimed by contract. These directives require a minimum 2-year legal guarantee period for goods and digital content, during which the seller bears the burden of proving that a defect did not exist at the time of delivery. Member state implementations vary in the details but are uniformly consumer-protective. In B2B transactions, civil law jurisdictions generally allow warranty disclaimers but subject them to good faith requirements and, in some cases, prohibit the disclaimer of warranties for latent defects known to the seller. Under German law (BGB §§ 434-442), warranty disclaimers in standard-form contracts (AGB) are subject to strict scrutiny under §§ 305-310 BGB, and blanket disclaimers of merchantability are unlikely to survive judicial review. French law (Articles 1641-1649 of the Code Civil) distinguishes between professional sellers (who are presumed to know of latent defects and cannot disclaim liability for them) and non-professional sellers (who may disclaim). In cross-border transactions, the CISG (United Nations Convention on Contracts for the International Sale of Goods) implies a warranty of conformity under Article 35 that can be excluded by agreement, but the exclusion must be clear and should specifically reference the CISG to be effective.

Related Clauses

• Limitation of Liability Clause - Caps total damages recoverable; works in conjunction with the warranty disclaimer to limit the seller's overall exposure.
• Indemnification Clause - May provide the buyer with a recovery path (e.g., for IP infringement) that survives the warranty disclaimer.
• Representations and Warranties - The warranty disclaimer must be coordinated with express representations and warranties to avoid internal contradictions.
• Exclusive Remedy Clause - Specifies the buyer's sole remedy for warranty breach (repair, replace, refund); paired with the disclaimer to form a complete warranty allocation framework.
• Integration Clause - Supports the warranty disclaimer by excluding pre-contractual statements and representations from the parties' agreement.
• Acceptance Criteria - Defines the standards against which the product is tested upon delivery; may interact with the warranty period and the disclaimer's scope.
• Service Level Agreement - In SaaS and cloud contracts, the SLA may function as a performance warranty that operates independently of the warranty disclaimer.

This glossary entry is provided for informational and educational purposes only and does not constitute legal advice. Warranty disclaimer requirements vary significantly by jurisdiction, transaction type, and the nature of the goods or services involved. Consult qualified legal counsel before drafting, negotiating, or relying on any warranty disclaimer provision.