What If Your Recently-Bought Used Car Explodes?

You just bought a used car and the engine blew up on the drive home from the dealership. What can you do? The answer depends primarily on one question: Did you buy it "as-is"? Judging by the phone calls I get at my office where I deal with automobile warranty law ("Lemon Law") the answer is usually, "Yes." Followed by, "What does 'as-is' mean?" If you're asking the question now while the car with the blown engine drips its last ounce of oil in your driveway it is too late. So, follow along as I explain what all of this means so you can protect yourself in the future.

The notion of what a "warranty" is, in general, would take far too much space to explain here so we'll jump ahead to the one which is important in this context: the Implied Warranty of Merchantability. Most states have adopted the Uniform Commercial Code where all of this is laid out. It says that if you buy goods from a merchant who deals with goods of that kind, you can expect that they will perform as one might expect without the merchant having to actually say it for it to be enforceable. (It says the goods will be "fit for the ordinary purposes for which such goods are used.") A refrigerator you buy from an appliance store will keep your food cold. A lawn mower from the Toro dealer will cut your grass. The car battery from the auto parts store will provide and store electricity for your car. You can expect these things to happen even if the salesperson was silent on what the products will do. It is implied by operation of law.

So, we start from the point that an automobile will provide safe and reliable transportation if you are buying it from a merchant who sells goods of the kind (a car dealer).

Note that this does not apply to a private sale. A private seller is not a merchant so the implied warranty never comes into existence. This protects you if you are a private seller but it means you must be more careful when buying from a private seller.

But, there is a loophole that swallows the rule: Most states allow sellers to disclaim the implied warranty of merchantability entirely, so long as they do it conspicuously. Once they do that, it is no longer implied and does not exist. And, in the states where it is allowed, most used car dealers disclaim the Implied Warranty of Merchantability. A while back, there was so much confusion in this area, the Federal Trade Commission came up with the Buyer's Guide. It is a single sheet of paper which specifies "WARRANTIES FOR THIS VEHICLE." It give two options: AS-IS NO WARRANTY and WARRANTY. There are boxes in front of those two choices and the dealer is told to check one. Federal law requires the sticker to be visible to a car shopper who is looking at the vehicle. Hence, it is often in one of the windows.

A great majority of used cars sold in America are sold with the "As-Is" box checked. (There are several states that do not allow the disclaimer and for them, there is a modified Buyers Guide.)

And "as-is" means with all faults. Repairs are the responsibility of the buyer. There are no guarantees. That car is yours. It could explode as you drive it off the lot. The smoldering remains are still yours. It even says so: "YOU WILL PAY ALL COSTS FOR ANY REPAIRS. I do wish the Feds would cool it with that cap-lock though.

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What If Your Recently-Bought Used Car Explodes?