When is a Car Really Sold “As-Is”? Common Exceptions to Warranty Disclaimers

On Behalf of | Nov 1, 2013 | Firm News

 Ordinarily, when a car dealership sells a car, there is an “implied warranty of merchantability”.  This warranty is called an “implied” warranty because it arises under the law even without the dealer doing anything to give the consumer the warranty rights.  Under the implied warranty, the dealership is responsible to cure any defects that would make the car “unmerchantable”.  Generally, that means that the car has to be fit for the purpose for which cars are ordinarily used, i.e., safe transportation on public roadways.  To be merchantable, the car also has to be in a condition that it would pass in the auto trade without objection.  So, a car with a defective transmission or with a nasty oil leak will probably not be merchantable. The laws in most states permit car dealerships to sell cars “As Is”, which means that it is sold without any warranty, including the implied warranty of merchantability.  But, sometimes a consumer has rights even when a dealer is claiming an “As Is” sale.  Here are some examples of circumstances when a dealer might be responsible to make repairs. 1) When state law requires that a warranty be provided. Many states require that cars meeting certain criteria be sold with a minimum warranty.  In Connecticut, cars that are less than six model years old that are sold for more than $5,000 must be “mechanically operational and sound” for 60 days or 3,000 miles, whichever comes first  If the car cost less than $5,000 but more than $3,000, then the warranty is for 30 days or 1,500 miles.  If the car has mechanical issues during that period, then the dealership is required to repair it – but the consumer must bring the car to the dealer. 2) When the Vehicle is sold with an extended warranty plan. When a consumer enters into a service contract with a dealership, then the dealer is not permitted to sell a car “As Is.”  Sometimes, the may or may not be aware that they bought a warranty, because auto dealers have been known to add these contracts without disclosing them.   In any event, if the consumer enters into a warranty plan with the dealer at the time of sale or within 90 days of the purchase, the dealer cannot rely on a claim that the vehicle was sold “as-is”.  In such a case, the dealer is responsible at least for the implied warranties, that is, that the Vehicle is fit for its ordinary purposes and conforms to its description.   Vehicles experience significant mechanical defects often do not comply with implied warranties. 3) When the dealership provides a 50/50 warranty. One type of service plan that many dealers give to a consumer is a 50/50 plan, where the consumer has to pay only half the cost of labor and half the cost of parts to repair the car.  But, if the dealer gives a 50/50 warranty, that means that the implied warranty of merchantability is in effect, and the dealer is responsible for the FULL cost of repairs that are necessary to make the car merchantable. 4) When the defects immediately impact the Vehicle’s safety. Connecticut law, like most states, provides for a safety exception.   Disclaimers of warranty do not apply to the requirement that Connecticut dealerships sell cars that are roadworthy.  Thus, if a dealer sells a consumer a vehicle with defects that make the vehicle unsafe for driving (such as defective brakes, bald tires, rotted frame, or vehicle shuts down at highway speeds), the dealership may be responsible for the cost of repairs. 5) When there is fraud. Connecticut law also provides for an exception when dealers lies about the vehicle’s condition.    For example, if a consumer decides to purchase a car on an “as-is” basis after the dealer tells him or her that the Vehicle is in great condition, or that certain defects have been or will be repaired prior to delivery, the disclaimer of warranties will not apply.  Dealers cannot hide behind the “As Is” disclaimer after they have misrepresented the vehicle’s condition or falsely promised that it will make necessary repairs.  Proving these claims can be tough, though, so it is always best to get all promises in writing. 6) When a Buyers Guide provides there is a warranty. Both federal and Connecticut laws require all used vehicles to be sold with a document called a “Buyers Guide” affixed to the window or windshield of the vehicle.  The Buyers Guide, an example of which is pictured below, must inform the consumer whether a warranty is provided and with the basic terms of any warranty.   Used Car Buyer’s Guide The Buyer’s Guide is considered to be part of the contract, so if it provides that the car is subject to a warranty, then the dealership is stuck with the warranty  If no warranty is provided, the guide must specify that the vehicle is sold “as-is”.   Under the law, only the consumer may remove the Buyers Guide from the Vehicle window.  If a dealer sells a vehicle to a consumer without the guide, the dealer may be prohibited from disclaiming the implied warranty of merchantability. CONCLUSION Many consumers mistakenly believe that there is nothing they can do after purchasing a lemon car on an as-is basis.  However, given the number of exceptions to “as-is” sales, many times the dealer may be responsible for repairs.   Consumers that purchase vehicles on an “as-is” basis should review their purchase paperwork carefully and should contact a consumer attorney if they experience problems with their vehicles; they may have more options than they think. They may be able to sue for the cost of repairs, or they may even be able to cancel the sale and get their money back.  Federal law provides that the dealership may even be responsible for the consumer’s attorney’s fees!