Kentucky Court of Appeals Interprets “As Is” Provision of Auto Sales Contract

Kentucky Court of Appeals Interprets “As Is” Provision of Auto Sales Contract

      A recent decision of the Kentucky Court of Appeals has given full force and effect to a “as is” limitation set forth in a contract for the purchase/sale of an automobile.  Roberts v. Lanigan Auto Sales, No. 2010-CI-000950-MR, 2013 WL 44020 (Ky. App. Jan. 4, 2013).

      Roberts purchased an automobile from Lanigan Auto Sales; he would later claim that a representative of Lanigan told him that the vehicle had not been damaged or involved in a wreck.  After closing on the sale, Roberts had the vehicle inspected by a third party, who determined that it had been involved in an accident and suffered damage.  Roberts brought suit against Lanigan, asserting a violation of the Kentucky Consumer Protection Act (KRS §§ 367.110-367.360).  Lanigan defended on the basis of an “as is” provision in the purchase/sale agreement with Roberts.  On the basis thereof, the trial court dismissed the action for failure to state a claim, and Roberts appealed.

      After reviewing the UCC as adopted in Kentucky (as well as its official comments) and related case law, the court held that an “as is” provision requires the buyer to make their own assessment as to the value and condition of the product being sold.  In that it is the obligation of the buyer to make that assessment, there cannot stand a claim for fraud as to those matters in that it is not the representation of the seller that is being relied upon by the buyer in making the sale.  Ergo, the dismissal of Roberts’ was affirmed.

      The Court of Appeals did note that an “as is” clause does not bar all potential claims, including those based upon express or implied warranty, citing in support thereof KRS § 355.2-316(3)(a).