"As Is Where Is"

"As Is, Where Is” clauses are enforceable in Texas, but not always. A valid “as is” clause prevents a party from seeking contract damages and negates the causation element of various claims and waives or disclaims certain implied warranties. See Gym-N-I Playgrounds v. Snider, 220 S.W.3d 905 (Tex. 2007) (holding that the “as is” clause negated the causation element of claims for negligence per se, gross negligence, violations of the Texas Deceptive Trade Practices-Consumer Protection Act and fraud but affirming that an “as is” clause does not negate the causation element in a fraudulent inducement claim).

Texas strongly favors a parties’ freedom of contract and parties are generally free to bargain for and decide the terms of their own contracts so long as they do not violate the law or public policy. See BMG Direct Marketing, Inc. v. Peake, 178 S.W.3d 763, 767 (Tex. 2005) and In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 129 (Tex. 2004).

Factors to be considered in determining whether an “as is” clause is enforceable are set out by the Supreme Court of Texas in the Prudential Insurance Company of Am. opinion. In making a determination, courts will look at the nature of the transaction and the totality of the circumstances surrounding the agreement, such as whether the clause is an important basis of the bargain rather than incidental or boilerplate provision, the sophistication of the parties and also whether the bargaining position of the parties were relatively equal.

Please note that this discussion does not include consumer leases, which may have a truth-in-lending requirements and does not discuss the requirements under Articles 2 and 2A of the Texas U.C.C., which may impose additional considerations concerning conspicuousness and notice."