Also, a seller cannot disclaim the validity or effectiveness of the core obligations (being that it transfers ownership (as understand the term ‘title’ to equal this – the Dutch term “titel” would have a clearly different meaning and is not something in itself transferable but reflecting the transfer as a legal act). Such disclaimer would mean that a seller could be entitled to sell something (against payment) which it cannot sell because it is not entitled to such good; and if that turns out to be the case (and hence no ownership being transferred), nevertheless keeping a claim to be paid the purchase price.

I have always understood the concept of ‘merchantability’ to be the possibility of a buyer to use and dispose of those rights or goods it has actually acquired (except where a contract stipulates that the use or the transferability is limited). This is in Roman (latin) words called the ‘Nemo plus rule’ (referring to the principle “Nemo plus iuris in alium transferre potest quam ipse habet”) – one cannot sell more than one has. A case in which more would be (suggested to be) sold results under Dutch law in a breach by the seller (and the buyer would nevertheless be protected if certain conditions are satisfied). (A thief cannot sell the bike he/she has just stolen, but an ignorant, good faith buyer paying a normal price and who has no reason to believe the bike was stolen, would become the owner.)

Many of these implied warranties seem to share a common origin with the (English) Sale of Goods Act 1979 (previous versions of which date back to at least 1893).

S. 12(1) implies a condition of title
S. 12(2) implies (a) warranty of freedom from encumbrances, and (b) quiet possession.
S. 14(2) implied a condition of merchantability until it was amended in 1994 to refer to a warranty of “satisfactory quality”. This is essentially a more modern form of words.
S. 14(3) implies a condition of fitness for purpose.

The distinction in the above between conditions and warranties is intentional. The distinction is explained elsewhere in the Act.

By section 6 of the Unfair Contract Terms Act 1977, the implied term of title cannot be excluded by any contract term. The implied terms of satisfactory quality or fitness for purpose cannot be excluded in contracts with consumers. Other sections of this Act prevent certain exclusions or limitations of liability from being effective unless they are considered “reasonable”.

There is no statutory requirement for prominent text in disclaimers, but Lord Denning (a radical English judge) famously commented in Spurling v Bradshaw that:

“…the more unreasonable a clause is, the greater the notice which must be given of it. Some clauses which I have seen would need to be printed in red ink on the face of the document with a red hand pointing to it before the notice could be held to be sufficient.”

This is sometimes known as the big red hand test. It is not taken literally, but may require onerous conditions to be highlighted in some way. If it is part of English law at all, it probably applies more to standard contract terms than to individually negotiated contracts.

In other words, similar underlying law, but in some ways very different. Therefore, standard terms excluding implied terms look very different in agreements made under English law from those under US laws.

As something close to my heart, what about Section 2-312(3) of the Uniform Commercial Code that gives a warranty of non-infringement unless disclaimed by a “merchant regularly dealing in goods of the kinds.” Especially nowadays, few companies really want to be defending intellectual property infringement claims for all aspects of their goods.

There are similar provisions in UCITA (for those states that enacted it) for goods that have a software mix.

Looking at your “other than the warranty of title” example also makes me wonder whether infringement would be in or out.

Alternatively, one could supplement my proposed language as follows:

In connection with the Buyer’s purchase of units of any Product under this agreement, the Vendor (1) disclaims any warranty of merchantability and (2) makes no warranty other than the warranty of title and the warranties expressed in this agreement.

By referring to the warranty of title, you avoid the awkwardness of an assertion that is categorical but inaccurate. And the blanket statement means that you don’t have to refer specifically to the warranty of fitness.

Ken

While I like your disclaimer of the warranties of merchantability and fitness, I still prefer to have a disclaimer of all warranties not stated in the agreement. The reason is that the UCC (so, presumably, some common law, too) allows the creation of express warranties in ways other than a statement in the agreement. See UCC section 2-313. Its three subsections allow three methods of creating an express warranty: affirmation of fact, description of goods, or sample of goods. In each case, it must be “made part of the basis of the bargain.” I’ve always assumed that “basis of the bargain” is broader than the record that memorializes the agreement. My nightmare is that a salesman’s ignorant affirmation of untrue face becomes a warranty that is the basis of the bargain.

One could, of course, say that a well-drafted integration clause will avoid this problem. (See Tina L. Stark’s Negotiating and Drafting Contract Boilerplate at 573.) The problem is that most of those — even Professor Stark’s — says something like “neither party has relied on any statement, representation, warranty, or agreement of the other party except for those expressly contained in this agreement.” That, to me, is ambiguous. The integration clause says that the warranty must be expressly contained in the agreement. But the UCC says that that an affirmation outside of the document is an express warranty that is part of the agreement. So, the concepts of “express” and “in the agreement” seem problematic to me.

I see enough there to worry me. And I really, really don’t want to have an argument with a customer about whether some salesman’s statement is part of the contract after the customer has something it claims is breach. I’d rather just have a well-drafted disclaimer of all warranties not stated in the document. That usually gets the customer to get express promises about the things that matter to the customer. If the disclaimer partly overlaps with a well-drafted integration clause, that’s a bonus.

So, I routinely disclaim all warranties not stated in the document. I don’t read that as negating the warranty of title without mentioning the word title. (Of course, I also routinely disclaim that, because we sell data, which is not capable of being owned under the copyright act. But that’s an unusual case.)

Chris