Company 1 sells Company 2 a piece of farm equipment. The sales contract specifies that Company 2 buys the equipment in an “as is” condition, with no…

The phrase "as is" in a sales contract is a classic example of a disclaimer of warranty. Under the Uniform Commercial Code (UCC), which governs such sales, this language effectively negates or disclaims the implied warranties of merchantability and fitness for a particular purpose. By stating the equipment is sold "as is," the seller (Company 1) is communicating that the buyer (Company 2) accepts the product in its current condition, with all faults, and that the seller makes no promises about its quality or performance.

A. An express warranty: This is an explicit, affirmative promise made by the seller about the goods. The "as is" clause does the opposite.

B. An implied warranty: This is a guarantee imposed by law that is not written or spoken. The "as is" clause is used specifically to eliminate these warranties.

D. A hold-harmless agreement: This is a contractual provision that transfers liability from one party to another; it is different from a warranty disclaimer, which negates a promise about a product.

1. The Institutes. (2021). CPCU 500: Foundations of Risk Management and Insurance. Chapter 4, "Legal Liability." The chapter discusses contract law and explains how sellers can use disclaimers like "as is" to negate implied warranties.

2. Cornell Law School Legal Information Institute. U.C.C. § 2-316. Exclusion or Modification of Warranties. This legal code, widely adopted by states, explicitly states that language like "as is" excludes all implied warranties. This is a foundational concept in university-level business law courseware.