As Is

Commercial term denoting agreement that buyer shall accept delivery of goods in the condition in which they are found on inspection prior to purchase, even if they are damaged or defective. Latent defects are generally excepted.
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As Is

As Is is a commercial term that signifies an agreement where the buyer agrees to accept delivery of goods in their current condition, based on an inspection conducted before purchase. This term is crucial in transactions where items may be sold with no guarantee of quality or functionality. Latent defects—defects not discoverable by reasonable inspection—are typically excluded from the “As Is” condition.

Examples

  1. Real Estate Sales: A property might be sold “As Is,” meaning the buyer accepts the current state of the property, including any visible damage or defects.
  2. Car Sales: Used car dealerships often sell vehicles “As Is,” indicating that no warranties or guarantees are provided for the car’s condition once purchased.
  3. Auction Sales: Items sold via auction are frequently sold “As Is,” with buyers acknowledging they take these items in their inspected state.

Frequently Asked Questions

1. Are sellers still liable for hidden defects in an “As Is” sale?

  • No, sellers are not liable for defects that are visible or discoverable upon reasonable inspection. However, sellers might still be liable for latent defects.

2. Can a buyer negotiate for repairs in an “As Is” agreement?

  • While an “As Is” clause generally means no repairs or modifications will be made by the seller, the buyer can still negotiate the terms before finalizing the sale.

3. Does “As Is” apply to both new and used goods?

  • The term can apply to both, but it is more common in transactions involving used or previously owned goods.

4. What happens if an “As Is” item is found to be significantly defective after purchase?

  • The buyer has limited recourse and typically cannot demand a refund or replacement except in cases of fraud or significant misrepresentation by the seller.

5. Is it advisable to buy something “As Is”?

  • It depends on the risk tolerance of the buyer and the due diligence conducted before the purchase. Buyers should thoroughly inspect the item and consider potential future costs for repairs or replacements.
  • Latent Defects: Flaws or imperfections hidden within an item that are not easily discoverable upon a normal inspection.
  • Warranty: A guarantee provided by the seller regarding the condition or functionality of the item for a specific period post-purchase.
  • Inspection: The process by which a buyer examines and evaluates the condition of an item before completing a purchase.
  • Due Diligence: The investigation or steps taken by a potential buyer before entering into a transaction to avoid an unforeseen risk.

Online References

Suggested Books for Further Studies

  • As Is: Legal Contracts and Risks by James R. Cox
  • Business Transactions and As Is Clauses by Sandra L. Beckwith
  • Commercial Law: Text, Cases, and Materials by M. Davis

Fundamentals of As Is: Business Law Basics Quiz

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Thank you for exploring the intricacies of “As Is” transactions and reviewing our quiz questions. Continue to build your knowledge for better-informed purchasing decisions.

ASB (Accounting Standards Board / Asset-Backed Security)
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