An AS IS exculpatory clause in a contract does not automatically relieve a party of any liability, especially where that party committed fraud to obtain the exculpatory clause.

The Facts

In both of the cases referenced below, the defendant included an as-is clause in a real estate contract. In Frianco the bank defendant (after discovering that the property that it had foreclosed on had significant water damage, and after paying to have those damages repaired) advised the purchaser of property in the offer contract that “it had little or no direct knowledge as to the condition of the property.” Similarly in Herhold, the defendant first represented to the buyers that they would be able to build a home on property they were selling, despite knowing of significant issues that would make that difficult or impossible. The defendant then included an “AS IS” clause in the real estate purchase agreement that also stated that “neither Seller, Broker nor Agent have made any representation or warranties…”…
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