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Drafting tip: Don’t let a court play Humpty Dumpty with your warranty-disclaimer language

Georgia’s supreme court seems to think that the words in a contract’s warranty disclaimers mean whatever the court wants them to mean. In that court’s November 17 opinion in Raysoni v. Payless Auto Deals, the main facts (in my view) were the following:

• The plaintiff, Raysoni, had bought a used minivan. Before the sale, he allegedly asked the sales representative whether the vehicle had ever been in an accident; the sales rep allegedly said no, and gave Raysoni a clean CarFax report.

• The sales contract included numerous disclaimers — and also said that at the auction (where presumably the dealership acquired the vehicle), the vehicle had been announced as having had unibody damage; moreover, the contract said, the buyer was urged to have the vehicle checked out before buying it.

• Two months after the sale, Raysoni allegedly learned that the vehicle had in fact been in an accident and suffered frame damage. The dealership rejected Raysoni’s request to undo the deal and get his money back. Raysoni sued for fraud.

• The trial court granted judgment on the pleadings in favor of the dealership, saying that in view of the disclaimers in the sales contract, it would have been unreasonable for Raysoni to rely on the alleged written- and oral statements by the sales representative, and therefore Raysoni’s fraud claims couldn’t succeed. The court of appeals affirmed.

But then the state’s supreme court took, how shall I put this, an intriguing view of the meaning of the disclaimer language, holding that:

The more prominent and general disclaimer of warranties—a provision that the minivan was sold “AS IS NO WARRANTY”—is followed immediately by an explanation that arguably qualifies and limits [sic] that disclaimer: “The dealership assumes no responsibility for any repairs regardless of any oral statements about the vehicle.”

Raysoni v. Payless Auto Deals, LLC, No. S13G1826, slip op. at 5 (Ga. Nov. 17, 2014) (emphasis added).

Seriously? The court’s interpretation seems totally contrary to the plain, unambiguous language of the contract. The agreement’s no-responsibility-for-repairs sentence doesn’t qualify or limit the as-is-no-warranty disclaimer, it emphasizes one of its implications.

And that’s not all—the supreme court continued:

Likewise, the additional disclaimers of specific warranties that appear in the fine print of the contract are followed by the provision that “NO SALESMAN VERBAL REPRESENTATION IS BINDING ON THE COMPANY,” and to the extent that the latter provision can be understood as an explanation of the foregoing disclaimers, it limits [sic] those disclaimers.

Id. (emphasis added).

Look, I get it; the supreme court didn’t like it that the dealership allegedly gave the buyer a clean CarFax report but then tried to rely on a warranty disclaimer and a written warning that the car had been reported to have been damaged. But despite the supreme court’s unanimous opinion, I still don’t see how anyone could reasonably conclude that the dealership’s warranty disclaimer was “qualifie[d] and limit[ed]” by the additional contract language. Moreover, on the facts as stated by the supreme court, I’m not sure what else the dealership could reasonably have done.

The danger now is that every contract drafter whose work might end up in a Georgia court must wonder whether even the most hard-hitting of warranty disclaimers will be enough to avoid a jury trial on fraud charges.

So what’s the drafting tip here? All I can think of is to say, after a warranty disclaimer, that “The following additional provisions are not intended to limit the warranty disclaimer of the previous sentence.” I’ve put comparable language into the Common Draft implied-warranty disclaimer. It seems a pity, though, that this might be necessary.

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