We devote a whole blog to this because it’s one of those areas where standard practice in the field, pre-environmental law, has been totally overtaken by cases where “as is” clauses intersect with environmental problems after a deal is done.
Some relatively unsophisticated sellers of commercial property continue to think they can use simple, bare-bones “as is” clauses to protect themselves. (As my wife would say, “nothing’s simple.”) No can do. Here are some of the leading cases on “as is” clauses of recent years. Later, in our discussion of contract drafting, we’ll review some ways you can “turbo charge” an “as is” clause to make it effective. But for now, here are some of the recent cases, in case you need to be convinced on the subject.
4. “As is” clauses, as conventionally written, are virtually meaningless:
a. such clauses only bar warranty claims. Umbra U.S.A., Inc. v. Niagara Frontier Transportation Authority, 262 A.D.2d 980, 981, 693 N.Y.S.2d 371, 372 (4th Dept. 1999);
b. not a defense to statutory claims for environmental contamination. International Paper Co. v. GAF Corp., 1995 WL 760641 (N.D.N.Y. 1995); International Clinical Laboratories, Inc. v. Stevens, 710 F. Supp. 466, 469-70 (E.D.N.Y. 1989); Southland Corp. v. Ashland Oil, Inc., 696 F. Supp 994 (D.N.J. 1988);
c. thus, no bar, e.g., to claim under N.Y. Oil Spill Law (see discussion below): Umbra U.S.A., Inc. v. Niagara Frontier Transportation Authority, 262 A.D.2d 980, 981, 693 N.Y.S.2d 371, 372 (4th Dept. 1999).
d. But, of course, former owner not usually liable for pollution that happened after it sold property, so long as this can be established. Kozemko v. Griffith Oil, 256 A.D.2d 1199, 1200, 682 N.Y.S.2d 503, 504 (4th Dept. 1998).
See discussion, below, in the “Draft Appropriate Contract Provisions” section, on how – on behalf of Seller – you might be able to draft an effective “as-is” provision.