Warranties create legal obligations that can expose your business to costly claims. Whether you are a seller of goods, a service provider, or a manufacturer, understanding when and how you can validly disclaim warranty obligations is essential to managing risk and avoiding litigation. In Texas and across the country, warranty disclaimers are enforceable only when they meet specific legal requirements — and courts have become increasingly willing to strike them down when they fall short.
This guide explains the types of warranties that arise in commercial transactions, the rules governing when disclaimers are valid, and what business owners in Houston, The Woodlands, Spring, Cypress, Sugar Land, Missouri City, and Richmond need to know before relying on a warranty disclaimer in a contract.
Understanding the Types of Warranties
Before you can disclaim a warranty, you need to understand what kind of warranty you are dealing with. Warranties in commercial transactions generally fall into two categories: express warranties and implied warranties.
Express warranties are statements, promises, or descriptions you make about a product or service that become part of the basis of the bargain. If you tell a buyer that a piece of equipment will operate at a specific capacity, or if your sales literature describes a product in specific terms, those representations may create an express warranty — even if you never intended to make a formal guarantee.
Implied warranties arise by operation of law, not from anything the parties say or write. The Uniform Commercial Code (UCC), which governs most commercial sales of goods in Texas, recognizes two main implied warranties: the implied warranty of merchantability and the implied warranty of fitness for a particular purpose. The warranty of merchantability means the goods are fit for the ordinary purposes for which such goods are used. The warranty of fitness for a particular purpose arises when the seller knows the buyer needs the goods for a specific use and the buyer relies on the seller’s expertise to select suitable goods.
Can You Disclaim Express Warranties?
Disclaiming express warranties is legally complex and often difficult to do effectively. Courts have consistently held that once an express warranty is created, a general disclaimer in the fine print of a contract does not automatically override it. If you made specific promises about a product’s quality or performance, those promises may be incorporated as terms of the contract regardless of boilerplate language saying otherwise.
That said, parties can structure their agreements to limit or exclude express warranty claims in certain circumstances. The key is that the disclaimer must be consistent with the express statements in the agreement. You cannot simultaneously promise that a product will perform in a specific way and then disclaim all liability if it does not. Courts will look at the overall context of the transaction and typically resolve inconsistencies in favor of the buyer.
Disclaiming the Implied Warranty of Merchantability
Under the UCC, a seller can disclaim the implied warranty of merchantability, but only if the disclaimer is conspicuous and specifically mentions merchantability. Texas courts have interpreted this requirement strictly. A buried clause in fine print will generally not suffice. The disclaimer must stand out from the rest of the contract — typically in bold, capitalized text or a different font — so that the buyer has a meaningful opportunity to notice it.
A typical compliant disclaimer of the implied warranty of merchantability might read: ‘THE SELLER MAKES NO WARRANTY OF MERCHANTABILITY WITH RESPECT TO THE GOODS SOLD UNDER THIS AGREEMENT.’ Courts have found that simply saying ‘sold as is’ or ‘no warranties’ can sometimes satisfy this requirement as well, though relying on such shorthand language carries risk.
Disclaiming the Implied Warranty of Fitness for a Particular Purpose
The UCC allows sellers to disclaim the implied warranty of fitness for a particular purpose without having to use that exact phrase. However, the disclaimer must still be in writing and must be conspicuous. A general disclaimer that a product is sold ‘as is’ or ‘with all faults’ can effectively disclaim this warranty if it meets the conspicuousness requirement.
Common language used to disclaim this warranty includes: ‘There are no warranties which extend beyond the description on the face hereof’ or ‘The seller disclaims any warranty that these goods are fit for any particular purpose of the buyer.’
What Does ‘Conspicuous’ Mean Under Texas Law?
The conspicuousness requirement is one of the most litigated issues in warranty disclaimer disputes. Under the UCC, a term is conspicuous when it is written or displayed in a manner that a reasonable person against whom it is to operate ought to have noticed. Courts look at factors such as:
- Whether the disclaimer appears in bold or capitalized text
- Whether it is set apart from the surrounding contract language
- Whether it appears in a font or color that draws attention
- Whether it is buried in dense fine print or presented separately for acknowledgment
Texas courts have found disclaimers conspicuous when they appear in all capitals in a contract that otherwise uses standard type. They have also found disclaimers inconspicuous when they are included in blocks of fine print that a reasonable person would likely overlook.
‘As Is’ Disclaimers in Texas
Texas has long recognized ‘as is’ disclaimers as a tool for sellers to shift risk to buyers in commercial transactions. The Texas Supreme Court addressed this issue directly and confirmed that a valid ‘as is’ agreement prevents a buyer from recovering on a breach of warranty theory, as long as the disclaimer was made freely and fairly and was not the product of fraud, misrepresentation, or other improper conduct.
For an ‘as is’ disclaimer to be effective in Texas, courts will generally examine whether:
- The buyer had a meaningful opportunity to inspect the goods or property
- The buyer had adequate information or ability to investigate the condition
- The seller did not engage in fraudulent concealment of known defects
- The disclaimer was conspicuous and part of the negotiated terms
A seller who actively conceals a defect or makes affirmative misrepresentations cannot rely on an ‘as is’ clause to avoid liability. Courts in Houston and throughout Texas have consistently held that fraud in the inducement can defeat an otherwise valid warranty disclaimer.
Warranty Disclaimers in Construction and Real Estate
Warranty disclaimers come up regularly in Texas real estate and construction transactions. Sellers of commercial property frequently include ‘as is’ clauses, and contractors often disclaim implied warranties in their agreements. However, the enforceability of these disclaimers depends heavily on the specific language used and the circumstances of the transaction.
In construction contracts, for example, the implied warranty of good and workmanlike performance is considered a significant protection for property owners. Texas courts have held that this implied warranty can be disclaimed, but only with clear and conspicuous language that specifically addresses it. Vague disclaimers that do not mention workmanship are generally insufficient.
Business owners in Sugar Land, Missouri City, and the greater Houston area who are involved in commercial real estate transactions or construction projects should have their agreements reviewed by a qualified attorney before signing, particularly when they include warranty disclaimer provisions.
Warranties in Service Contracts
The UCC governs the sale of goods, but it generally does not apply to pure service contracts. When a contract involves primarily services rather than goods, the warranty rules are different. In service transactions, implied warranties may arise under common law, and the rules for disclaiming them vary depending on the nature of the service, the relationship between the parties, and applicable industry standards.
Mixed contracts — those involving both goods and services — add another layer of complexity. Courts apply a predominant purpose test to determine whether the UCC or common law governs. If the predominant purpose of the contract is the sale of goods, the UCC warranty rules apply. If the predominant purpose is the provision of services, common law principles control.
Limitations of Remedy and Warranty Disclaimers
Even when a warranty cannot be fully disclaimed, parties can often limit the available remedies for breach. The UCC allows parties to exclude or limit consequential damages in commercial contracts unless the limitation is unconscionable. Sellers frequently include provisions such as:
- Limiting the buyer’s remedy to repair or replacement of defective goods
- Excluding liability for lost profits or incidental damages
- Capping total liability at the purchase price of the goods
These remedy limitation clauses are distinct from warranty disclaimers but serve a similar risk-management function. Courts generally enforce them in commercial contracts between sophisticated parties, though unconscionability challenges remain available.
When Warranty Disclaimers Fail
Businesses that rely on warranty disclaimers sometimes discover, in litigation, that their disclaimers are unenforceable. Common reasons warranty disclaimers are struck down include:
- Failure to meet the conspicuousness requirement
- Failing to specifically mention merchantability when disclaiming that warranty
- Attempting to disclaim liability for fraud or intentional misconduct
- Using a disclaimer that contradicts express promises made during negotiations
- Enforcing a disclaimer against a non-merchant consumer in a way courts find unconscionable
For businesses in The Woodlands, Spring, Cypress, and the Houston metropolitan area, a warranty dispute can quickly escalate into significant litigation. Understanding the limits of your disclaimer provisions before a dispute arises is far more cost-effective than defending a claim after the fact.
How Anunobi Law Can Help
If you are facing a warranty dispute or want to ensure your commercial contracts include enforceable warranty disclaimers, Anunobi Law is here to help. We represent businesses throughout Houston, The Woodlands, Spring, Cypress, Sugar Land, Missouri City, and Richmond in all types of commercial litigation, including warranty claims, breach of contract disputes, and product liability matters.
Our attorneys understand the nuances of Texas warranty law and the UCC, and we work with our clients to develop practical strategies for protecting their interests both before and after disputes arise. Whether you are a buyer seeking to pursue a warranty claim or a seller defending one, we have the experience and knowledge to guide you through the process.
Contact Anunobi Law today at 1-855-538-0863 to schedule a consultation. We are committed to providing aggressive, results-oriented representation to businesses of all sizes across the greater Houston area.
Legal Disclaimer: This article is provided for informational purposes only and does not constitute legal advice. The information contained herein is general in nature and may not apply to your specific situation. Reading this article does not create an attorney-client relationship between you and Anunobi Law. Laws and regulations vary by jurisdiction and are subject to change. You should consult a qualified attorney regarding your specific legal circumstances before taking any action. Anunobi Law makes no representations or warranties regarding the accuracy or completeness of the information in this article.