Blog

When "As Is" Is Not a Legal Defense to a DTPA Claim

Dealers that recondition vehicles or re-sell vehicles after a repossession should be careful about withholding service history or major mechanical problems to potential customers asking specific questions about a car's history. You can waive the warranty, but any misrepresentation or concealment of a known fact may remain (i.e. don't rely on Carfax as a defense).  

Section 2.316 of the Texas Business and Commerce Code (the Texas version of the Uniform Commercial Code) provides that there are no warranties given to the buyer if language is included such as “as is” or “with all faults.” In addition, the federal Magnuson-Moss Warranty Act authorizes “as is” sales. The Federal Trade Commission specifically includes the term “as is” on its Buyer's Guides, which may be checked to indicate no warranties are offered.

If it is not a warranty issue, then what's the problem? The answer is the Texas Deceptive Trade Practices Act.  While the fact that selling “as is” disclaims warranties, the DTPA claim remains. The DTPA is for misrepresentation of facts and NOT for breach of warranty. Thus, selling “as is” doesn't prevent a DTPA claim.  Further, the DTPA has a specific provision that prohibits sellers from seeking to disclaim a consumer's rights under the DTPA.
 
Any record of defects or repairs including receipts, texts, emails, or other knowledge (even complaints on Facebook from a prior owner) concealing or misrepresenting that a vehicle has a hidden transmission, timing belt, ECU, or other mechanical issue could come back to you in the form of a DTPA claim. While you don't have an affirmative duty to disclose every issue with a vehicle, if a customer asks any specific questions about a vehicle and you make a representation that there are “no issues” or the car “is perfect” if you know otherwise, then you may have some exposure. Care should be taken that verbal or written statements (including texts to customers or other employees) are not made that might contradict the fact that no warranties are given.
 
Example: “During phone and text message negotiations and discussions with Plaintiff, Defendant's employees described the vehicle as being in “turnkey, excellent condition.”  (Yet withheld information about a known manifold leak from a prior pre-purchase inspection).
 
It is recommended that sellers who wish to exclude warranties should make it very clear at the time of sale that no warranties are given. In addition to checking the “as is” box on the Buyer's Guide, sellers should include a separate warranty disclaimer form at closing that spells out what “as is” means and specifically disclaims implied warranties (such a form is available from Burrell Printing).  

Comments

 
By: Heather mitchelle
On: 04/25/2020 12:24:16
Was charged for repairs that appear not to have been fixed what actions do i need to take

Leave a comment

Commenting is restricted to members only. Please login now to submit a comment.