Does this "AS IS" / warranty-disclaimer clause validly exclude South Dakota's implied warranties?
Yes, through either of two independent routes under SDCL 57A-2-316. Route one, subsection (2): "Subject to subsection (3), to exclude or modify the implied warranty of merchantability or any part of it the language must mention merchantability and in case of a writing must be conspicuous, and to exclude or modify any implied warranty of fitness the exclusion must be by a writing and conspicuous." Route two, subsection (3)(a), works without mentioning merchantability at all: "unless the circumstances indicate otherwise, all implied warranties are excluded by expressions like 'as is,' 'with all faults' or other language which in common understanding calls the buyer's attention to the exclusion of warranties and makes plain that there is no implied warranty." Subsection (1) sets the frame both routes work inside: an express warranty and a disclaimer are "construed wherever reasonable as consistent with each other," and a disclaimer "is inoperative to the extent that such construction is unreasonable." James River Equipment Co. v. Beadle County Equipment, Inc. confirms route two is the only mechanism the UCC provides for an "as is" clause specifically: "The UCC contemplates that only implied warranties can be disclaimed by use of 'as is' clauses."
The trap
James River's own framing is also the limit: "as is" language under subsection (3)(a) can exclude only IMPLIED warranties, never an express warranty the seller separately made: a drafter who wants to disclaim implied warranties while an express warranty survives is using the right tool, but a drafter hoping "as is" also cancels a stray express representation is not. Subsection (3)(a) is itself qualified by "unless the circumstances indicate otherwise," so surrounding facts can defeat even squarely worded "as is" language. Subsection (3)(b) is a separate, fact-driven route that has nothing to do with how the clause is worded: when the buyer before contracting has examined the goods (or a sample) as fully as desired, or has refused an offered examination, there is no implied warranty as to defects the examination ought to have revealed. Remedies for a warranty that is NOT excluded are governed separately by SDCL 57A-2-718 and 57A-2-719, not by this section. A disclaimer also does not have to sit in the sales contract itself to be fought over: in Hanson v. Funk Seeds International it rode on the delivery receipts and on a tag attached to the seed bags, and of the trial court's refusal to admit them and its unconscionability finding the Supreme Court said, "Appellant here asserts that such a determination was in error. We disagree." Hanson also states the frame: "The exclusion or modification of warranties and the contractual modification or limitation of remedies is permitted under SDCL 57A-2-316 and SDCL 57A-2-719, respectively." Read that line of cases with its sequel, though. Schmaltz v. Nissen records that "In 1986 the South Dakota Legislature passed a legislative enactment found at Chapter 410 of the 1986 Session Laws" abrogating "The ruling in Decision II of Hanson v. Funk Seeds International," and Schmaltz applied Hanson anyway only because "The cause of action in the present case arose in 1981" and "there is no retroactive intent from the enactment." Whether Chapter 410 reaches past the seed-warranty facts is not resolved here.
9 authorities
- statuteSDCL § 57A-2-316enactment date not established
The words that state the rule
Subject to subsection (3), to exclude or modify the implied warranty of merchantability or any part of it the language must mention merchantability and in case of a writing must be conspicuous, and to exclude or modify any implied warranty of fitness the exclusion must be by a writing and conspicuous.
- statuteSDCL § 57A-2-316enactment date not established
The words that state the rule
(3) Notwithstanding subsection (2), (a) unless the circumstances indicate otherwise, all implied warranties are excluded by expressions like "as is," "with all faults" or other language which in common understanding calls the buyer's attention to the exclusion of warranties and makes plain that there is no implied warranty; and (b) when the buyer before entering into the contract has examined the goods or the sample or model as fully as he desired or has refused to examine the goods there is no implied warranty with regard to defects which an examination ought in the circumstances to have revealed to him; and (c) an implied warranty can also be excluded or modified by course of dealing or course of performance or usage of trade.
- case646 N.W.2d 265James River Equipment Co. v. Beadle County Equipment, Inc.S.D.decided 2002read it at the source ↗
The words that state the rule
The UCC contemplates that only implied warranties can be disclaimed by use of “as is” clauses.
- statuteSDCL § 57A-2-316enactment date not established
The words that state the rule
(4) Remedies for breach of warranty can be limited in accordance with the provisions of this chapter on liquidation or limitation of damages and on contractual modification of remedy (§§ 57A-2-718 and 57A-2-719 ).
- statuteSDCL § 57A-2-316enactment date not established
The words that state the rule
(1) Words or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit warranty shall be construed wherever reasonable as consistent with each other; but subject to the provisions of this chapter on parol or extrinsic evidence (§ 57A-2-202 ) negation or limitation is inoperative to the extent that such construction is unreasonable.
The words that state the rule
At trial, appellant Funk attempted to introduce delivery receipts and a tag which was attached to the bags of seed delivered to appellee Hanson. These exhibits contained the warranty disclaimer and limitation of remedy provisions outlined in the facts above. The trial court, however, denied admission of these exhibits and found the provisions in question to be unconscionable. Appellant here asserts that such a determination was in error. We disagree.
The words that state the rule
The exclusion or modification of warranties and the contractual modification or limitation of remedies is permitted under SDCL 57A-2-316 and SDCL 57A-2-719, respectively. In sum, a seller may use a disclaimer clause to control his liability by reducing the manner in which he can be found to have breached
The words that state the rule
In 1986 the South Dakota Legislature passed a legislative enactment found at Chapter 410 of the 1986 Session Laws. This legislative enactment states: "BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA: The ruling in Decision II of Hanson v. Funk Seeds International, 373 N.W.2d 30 (S.D. *663 1985) is hereby abrogated."
The words that state the rule
The cause of action in the present case arose in 1981. Nowhere in the legislative enactment is there any statement that this act is retroactive or that it is intended to be curative or explanatory of prior legislation. SDCL 2-14-21 provides: "No part of the code of laws enacted by § 2-16-13 shall be construed as retroactive unless such intention plainly appears." Since there is no retroactive intent from the enactment, it has no application in this case. The decision of the trial court holding the disclaimer of warranties and limitation of damages unconscionable is affirmed.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.