What Makes An Effective Disclaimer?

In Raysoni v. Payless Auto Deals, LLC, Case No. S13G1826 (decided November 17, 2014), the Georgia Supreme Court offered guidance to sellers and buyers about what constitutes an effective disclaimer of warranties and representations.

The Plaintiff had purchased a minivan from Payless Auto Deals. Asserting claims of common law fraud and violations of the Fair Business Practices Act, the Plaintiff alleged that the salesperson had misrepresented the vehicle as never having been damaged. The trial court had dismissed the case, finding that the complaint failed as a matter of law to state a claim, and the Georgia Court of Appeals affirmed. The seller successfully argued that the disclaimer language in the sales agreement prevented the Plaintiff from reasonably relying upon the alleged representations about the condition of the vehicle.

The Supreme Court of Georgia reversed, finding that whether the Plaintiff’s reliance had been reasonable could not be decided as a matter of law. The Court focused on the disclaimer language and found it to be equivocal and inconsistent. The sales agreement only stated that a salesperson’s verbal representations were not binding upon the seller, but the Plaintiff also claimed to have relied upon written representations. Opinion, pp. 4-5. The sales agreement said that the vehicle had been sold “as is no warranty,” but the agreement also contained other language about warranties that the Court construed as potentially limiting the scope of that disclaimer. Opinion, pp. 5-6. The Court found ambiguous the language in the sales agreement indicating that the vehicle was “announced” at auction as having damage. The Court found that language ambiguous because there was nothing indicating what was said, when it was said, and who said it. Opinion, p. 7. Although not essential to the decision, the Court also noted that although some of the disclaimer language was in bold type, that did not render the language conspicuous. The relevant language appeared in fine print, in a mass of printing the entirety of which was in capital letters. Opinion, p. 6 n.5.

This decision offers a few lessons for sellers about how to write effective disclaimers. The Raysoni case may be one where too much disclaimer language worked against the seller because it rendered the entirety of the disclaimers inconsistent and contradictory. Various disclaimers were scattered throughout the sales agreement, which might have reflected the language having been added on an ad hoc basis.  This contributed to the Court’s conclusion that the language was ambiguous.  The seller would have been better served by a single, simpler but more comprehensive disclaimer that was not placed within contract provisions addressing other subjects.

For more information on effective disclaimer language, contact your Appellate Counsel at Smith, Gambrell & Russell.

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