WEBVTT 00:00:00.000 --> 00:00:02.060 You've seen it. We've all seen it. You're walking 00:00:02.060 --> 00:00:04.519 through a used car lot, maybe kicking the tires 00:00:04.519 --> 00:00:07.280 on a sedan that's seen better days. Or maybe 00:00:07.280 --> 00:00:09.099 you're scrolling through Zillow late at night, 00:00:09.199 --> 00:00:11.900 looking at a fixer -upper that seems just a little 00:00:11.900 --> 00:00:15.160 too cheap to be true. And there it is. That little 00:00:15.160 --> 00:00:17.559 sticker. That sticker in the window or a bolded 00:00:17.559 --> 00:00:19.399 line in the contract. Just two little words. 00:00:20.260 --> 00:00:23.719 As is. It looks so harmless, doesn't it? Just 00:00:23.719 --> 00:00:26.320 two syllables. It feels almost casual, you know? 00:00:26.379 --> 00:00:28.440 That does. It feels colloquial. Like, hey, what 00:00:28.440 --> 00:00:30.480 you see is what you get. It seems simple. But 00:00:30.480 --> 00:00:33.100 the reason we're doing this deep dive today is 00:00:33.100 --> 00:00:35.780 because those two words are actually some of 00:00:35.780 --> 00:00:38.439 the most dangerous, heavy lifting vocabulary 00:00:38.439 --> 00:00:40.799 in the entire business world. Oh, absolutely. 00:00:41.020 --> 00:00:43.460 It's a deceptively simple phrase. Because when 00:00:43.460 --> 00:00:46.719 you sign next to as is, you aren't just agreeing 00:00:46.719 --> 00:00:49.460 to the condition of the item. You're, well, you're 00:00:49.460 --> 00:00:52.140 stepping into a legal minefield. So welcome to 00:00:52.140 --> 00:00:55.280 the deep dive. Today, we are unpacking the legal 00:00:55.280 --> 00:00:58.299 DNA of the as -is clause. We're going to look 00:00:58.299 --> 00:01:01.520 at why it exists, how it effectively strips you 00:01:01.520 --> 00:01:04.379 of your rights, and the very narrow, very specific 00:01:04.379 --> 00:01:07.739 loopholes that might, and I stress, might save 00:01:07.739 --> 00:01:09.920 you. And we're working from a sack of sources 00:01:09.920 --> 00:01:13.959 today, primarily legal definitions from the Uniform 00:01:13.959 --> 00:01:17.599 Commercial Code, some case law summaries, and 00:01:17.599 --> 00:01:21.219 comparisons of U .S. versus U .K. consumer protection 00:01:21.219 --> 00:01:23.200 statutes yeah so let's start with the baseline 00:01:23.200 --> 00:01:27.819 what is the actual ironclad definition of as 00:01:27.819 --> 00:01:30.180 is okay so if we strip away all the marketing 00:01:30.180 --> 00:01:32.400 fluff and just look at the legal definition as 00:01:32.400 --> 00:01:35.159 is is a disclaimer it indicates that the property 00:01:35.159 --> 00:01:37.359 is being sold in its existing condition without 00:01:37.359 --> 00:01:40.019 any modifications or improvements okay existing 00:01:40.019 --> 00:01:41.319 condition that sounds straightforward enough 00:01:41.319 --> 00:01:42.579 i'm buying the thing right in front of right 00:01:42.579 --> 00:01:45.239 but here is where the legal weight comes in it's 00:01:45.239 --> 00:01:46.959 not just a description of the object's physical 00:01:46.959 --> 00:01:50.519 state it's a waiver In legal, business, and consumer 00:01:50.519 --> 00:01:52.879 settings, this term is used to establish that 00:01:52.879 --> 00:01:55.180 the buyer is accepting the property with absolutely 00:01:55.180 --> 00:01:57.760 no warranties or guarantees. And that's the kicker. 00:01:57.760 --> 00:02:01.060 No warranties. None. Zero. But why? I mean, obviously, 00:02:01.140 --> 00:02:03.659 it protects the seller. But what specifically 00:02:03.659 --> 00:02:05.579 are they trying to avoid? Because usually when 00:02:05.579 --> 00:02:07.739 I buy something, there's an expectation that 00:02:07.739 --> 00:02:10.240 it works. You've just hit on the core concept 00:02:10.240 --> 00:02:13.520 here. They're using as is to disclaim what we 00:02:13.520 --> 00:02:17.000 call implied warranties. This is crucial to grasp. 00:02:17.139 --> 00:02:20.259 When you buy something in a normal retail environment, 00:02:20.680 --> 00:02:23.240 say a toaster from a department store, there 00:02:23.240 --> 00:02:27.180 is an implied warranty of merchantability. Merchantability. 00:02:27.280 --> 00:02:30.439 That's a $5 word. It's a foundational legal standard. 00:02:30.719 --> 00:02:33.500 It basically means the toaster is fit for the 00:02:33.500 --> 00:02:35.879 ordinary purpose for which toasters are used. 00:02:36.039 --> 00:02:38.139 You know, it toasts the bread. It doesn't explode. 00:02:38.259 --> 00:02:39.939 It doesn't just sit there like a paperweight. 00:02:40.169 --> 00:02:43.370 Exactly. That is the legal safety net. But as 00:02:43.370 --> 00:02:46.889 -is is the specific legal incantation that cuts 00:02:46.889 --> 00:02:49.990 that safety net and negates the implied warranty. 00:02:50.189 --> 00:02:52.509 The seller is telling you, I am not promising 00:02:52.509 --> 00:02:54.770 this thing works. I am not promising it's safe. 00:02:54.949 --> 00:02:57.669 So if I buy that toaster as -is and it doesn't 00:02:57.669 --> 00:02:59.750 toast, I essentially bought a really expensive 00:02:59.750 --> 00:03:02.349 paperweight. And the law says, congratulations 00:03:02.349 --> 00:03:04.830 on your new paperweight. That's it. The seller 00:03:04.830 --> 00:03:06.849 is washing their hands of the item the second 00:03:06.849 --> 00:03:09.430 you hand over the cash. And looking at our source 00:03:09.430 --> 00:03:11.310 material, there's a phrase that often goes with 00:03:11.310 --> 00:03:14.370 as is that I find even more chilling. It's the 00:03:14.370 --> 00:03:17.250 with all faults clause. Yes, that's the standard 00:03:17.250 --> 00:03:20.490 pairing. The contract will usually say the buyer 00:03:20.490 --> 00:03:24.409 accepts the item as is and with all faults, whether 00:03:24.409 --> 00:03:26.770 or not immediately apparent. Whether or not immediately 00:03:26.770 --> 00:03:28.389 apparent. That's the part that gets me. It's 00:03:28.389 --> 00:03:30.469 one thing if I see a dent in the fender, I can 00:03:30.469 --> 00:03:33.229 see that fault. I accept it. But this language 00:03:33.229 --> 00:03:36.000 covers things I can't see. Correct. And this 00:03:36.000 --> 00:03:38.020 connects us directly to the ancient legal concept 00:03:38.020 --> 00:03:40.919 of caveat emptor. Buyer beware. Buyer beware. 00:03:41.039 --> 00:03:43.939 But in modern law, as -is is kind of the weaponization 00:03:43.939 --> 00:03:47.219 of caveat emptor. When as -is is in play, the 00:03:47.219 --> 00:03:50.460 burden of quality shifts entirely. How so? In 00:03:50.460 --> 00:03:52.379 a normal transaction, the seller carries the 00:03:52.379 --> 00:03:55.219 burden to deliver a working product. In an as 00:03:55.219 --> 00:03:57.960 -is transaction, the burden is 100 % on you, 00:03:58.020 --> 00:04:00.780 the buyer, to inspect the item, to get expert 00:04:00.780 --> 00:04:03.900 advice before you sign. So once the ink is dry, 00:04:04.120 --> 00:04:06.360 the f***? The faults, hidden or visible, are 00:04:06.360 --> 00:04:08.939 yours. They're your problem now. And this isn't 00:04:08.939 --> 00:04:11.219 just some, you know, handshake agreement rule. 00:04:11.319 --> 00:04:13.199 This is codified, right? We're not just talking 00:04:13.199 --> 00:04:15.699 about common law tradition here. No, this is 00:04:15.699 --> 00:04:18.620 statutory. In the United States specifically, 00:04:19.019 --> 00:04:22.839 the Uniform Commercial Code, the UCC. It explicitly 00:04:22.839 --> 00:04:26.860 cites as is as the specific language capable 00:04:26.860 --> 00:04:30.000 of excluding implied warranties. It's written 00:04:30.000 --> 00:04:32.860 into the bedrock of commercial law. OK, so that's 00:04:32.860 --> 00:04:35.319 the abstract legal theory. But yeah, I want to 00:04:35.319 --> 00:04:37.519 make this real for everyone listening, because 00:04:37.519 --> 00:04:40.519 we have a scenario in the source material that 00:04:40.519 --> 00:04:43.620 is just it's a nightmare. The classic used car 00:04:43.620 --> 00:04:45.560 scenario. It's a classic for a reason. This happens. 00:04:45.920 --> 00:04:47.939 Every single day. So picture this. You're at 00:04:47.939 --> 00:04:50.500 an auction, maybe a used car lot. You see a car. 00:04:50.540 --> 00:04:53.279 It looks decent. The paint is shiny. You know, 00:04:53.300 --> 00:04:55.259 the interior smells okay. The price is right. 00:04:55.540 --> 00:04:58.759 But the contract says the buyer accepts the automobile 00:04:58.759 --> 00:05:01.339 as is with all faults. You sign. You pay. You 00:05:01.339 --> 00:05:02.920 get the keys. You feel great. You feel great. 00:05:03.040 --> 00:05:04.939 And then you drive off the lot. And according 00:05:04.939 --> 00:05:07.600 to our source, literally two minutes later, two 00:05:07.600 --> 00:05:10.319 minutes, the car stalls at the first stoplight. 00:05:10.660 --> 00:05:14.379 The engine just seizes up. It's dead. A brick 00:05:14.379 --> 00:05:17.180 on wheels. It's a disaster. So naturally, you 00:05:17.180 --> 00:05:18.839 march back to the cell. You've only been gone 00:05:18.839 --> 00:05:21.300 two minutes. You demand a refund. What happens? 00:05:21.500 --> 00:05:24.519 The seller points to the contract. And legally, 00:05:24.779 --> 00:05:27.740 you are out of luck. Even though it was two minutes. 00:05:27.860 --> 00:05:30.480 The timing is completely irrelevant. The severity 00:05:30.480 --> 00:05:32.560 of the failure is irrelevant. Oh, wait. What 00:05:32.560 --> 00:05:35.779 about lemon loss? I think most listeners assume 00:05:35.779 --> 00:05:37.800 there's some sort of cooling off period for something 00:05:37.800 --> 00:05:40.639 this bad. And that is such a dangerous assumption. 00:05:41.360 --> 00:05:44.160 Lemon laws typically apply to new cars, or they 00:05:44.160 --> 00:05:46.639 have really specific mileage and age limits that 00:05:46.639 --> 00:05:50.720 used cars often exceed. You signed an as -is 00:05:50.720 --> 00:05:53.420 contract. You agreed to buy the car in whatever 00:05:53.420 --> 00:05:56.279 condition it presently existed. So if that condition 00:05:56.279 --> 00:05:58.680 was about to explode, then I bought a car that 00:05:58.680 --> 00:06:01.230 was about to explode. You accepted. all faults. 00:06:01.410 --> 00:06:03.990 The seized engine is a fault. You own it. That 00:06:03.990 --> 00:06:06.430 just feels incredibly unfair. It feels unfair, 00:06:06.610 --> 00:06:09.310 but the law prioritizes the freedom of contract 00:06:09.310 --> 00:06:12.050 here. You were free to walk away. You were free 00:06:12.050 --> 00:06:14.629 to bring a mechanic. You didn't. You took the 00:06:14.629 --> 00:06:17.670 risk for that lower price. I want you, the listener, 00:06:17.769 --> 00:06:20.069 to just sit with that for a second. Imagine that 00:06:20.069 --> 00:06:22.829 feeling of helplessness. You're on the side of 00:06:22.829 --> 00:06:25.310 the road, smoke pouring from the hood. You're 00:06:25.310 --> 00:06:27.910 out thousands of dollars, and the law is essentially 00:06:27.910 --> 00:06:30.939 shrugging its shoulders at you. That's the power 00:06:30.939 --> 00:06:34.300 of these two words. It really emphasizes why 00:06:34.300 --> 00:06:37.120 the inspection phase is just non -negotiable. 00:06:37.139 --> 00:06:38.939 If you skip the mechanic, you are volunteering 00:06:38.939 --> 00:06:42.540 to take on that risk. Okay, so if the as -is 00:06:42.540 --> 00:06:45.680 clause is the villain of this story, is there 00:06:45.680 --> 00:06:48.740 a hero? Is there any kryptonite for this clause? 00:06:49.279 --> 00:06:52.160 Because our source does mention a loophole. There 00:06:52.160 --> 00:06:53.800 is a loophole, and this is where the nuance of 00:06:53.800 --> 00:06:55.680 the law gets fascinating. Here's where it gets 00:06:55.680 --> 00:06:58.870 really interesting. Because while as -is protects 00:06:58.870 --> 00:07:01.910 the seller from implied warranties, it does not 00:07:01.910 --> 00:07:04.589 protect them from lying. Precisely. We need to 00:07:04.589 --> 00:07:06.889 distinguish between implied warranties and express 00:07:06.889 --> 00:07:09.389 warranties. Okay, break that down for us, because 00:07:09.389 --> 00:07:11.829 warranty just sounds like guarantee to most people. 00:07:11.990 --> 00:07:14.569 So, like we said, an implied warranty is that 00:07:14.569 --> 00:07:17.939 automatic assumption that a thing works. As is 00:07:17.939 --> 00:07:21.579 kills that. An express warranty, though, is a 00:07:21.579 --> 00:07:23.920 specific promise or description made by the seller 00:07:23.920 --> 00:07:27.579 about the product. And as is generally does not 00:07:27.579 --> 00:07:30.579 kill an express warranty. Okay. So how is an 00:07:30.579 --> 00:07:33.819 express warranty created? Do I need some certificate 00:07:33.819 --> 00:07:36.519 with a gold seal? No. And that's the trap for 00:07:36.519 --> 00:07:38.779 the seller. An express warranty can be created 00:07:38.779 --> 00:07:41.579 simply by the seller's description of the item. 00:07:41.680 --> 00:07:43.920 The description itself? Yes. Let's go back to 00:07:43.920 --> 00:07:46.829 that car. The seller sells it. As is. But let's 00:07:46.829 --> 00:07:49.009 say in the listing, the seller explicitly described 00:07:49.009 --> 00:07:51.589 the car as having a brand new transmission. OK, 00:07:51.689 --> 00:07:54.389 so they made a specific factual claim, put it 00:07:54.389 --> 00:07:56.769 in writing in the ad. Right. Now you buy it as 00:07:56.769 --> 00:07:59.290 is. You drive away. The transmission fails. A 00:07:59.290 --> 00:08:01.230 mechanic looks at it and says, this isn't a new 00:08:01.230 --> 00:08:03.089 transmission. This thing's the original one from 00:08:03.089 --> 00:08:06.470 15 years ago. In that case, the as is clause 00:08:06.470 --> 00:08:09.449 does not protect the seller. The car did not 00:08:09.449 --> 00:08:11.550 conform to the seller's description. You can 00:08:11.550 --> 00:08:13.970 void the sale. Because they made an express warranty, 00:08:14.250 --> 00:08:16.529 it has a new transmission. Yeah. And that turned 00:08:16.529 --> 00:08:20.709 out to be false. Exactly. The as is covers the 00:08:20.709 --> 00:08:22.810 condition, but it doesn't cover false descriptions. 00:08:23.310 --> 00:08:26.389 You can't sell a red car as is and deliver a 00:08:26.389 --> 00:08:28.850 blue car. The description creates a baseline 00:08:28.850 --> 00:08:31.370 that has to be met. What if they just say it 00:08:31.370 --> 00:08:33.809 runs great? Is that an express warranty? That 00:08:33.809 --> 00:08:36.570 gets tricky. That's often considered puffery. 00:08:36.850 --> 00:08:40.250 Just sales talk. Courts give sellers some leeway 00:08:40.250 --> 00:08:44.399 to brag. But specific, measurable claims, new 00:08:44.399 --> 00:08:47.220 tires, low mileage, rebuilt engine, accident 00:08:47.220 --> 00:08:50.059 -free, those create express warranties. The runs 00:08:50.059 --> 00:08:52.519 great is an opinion, but new tires is a fact. 00:08:52.759 --> 00:08:55.500 Exactly. And facts have to be true. And this 00:08:55.500 --> 00:08:57.299 leads us to the other big exception mentioned 00:08:57.299 --> 00:09:00.659 in the source, fraud. Yes, fraud in the inducement. 00:09:00.679 --> 00:09:03.539 This overrides everything. Fraud in the inducement. 00:09:03.850 --> 00:09:05.750 Sounds like a crime thriller title. It sounds 00:09:05.750 --> 00:09:07.889 dramatic, but it's very practical. It means the 00:09:07.889 --> 00:09:11.370 seller actively hid something or lied to get 00:09:11.370 --> 00:09:13.269 your signature. Okay, give me an example of what 00:09:13.269 --> 00:09:14.929 that looks like. Not just a mistake, but actual 00:09:14.929 --> 00:09:17.590 fraud. Okay, imagine the seller knew the engine 00:09:17.590 --> 00:09:20.269 block was cracked and they filled it with heavy 00:09:20.269 --> 00:09:22.950 grease or even sawdust, which is an old trick 00:09:22.950 --> 00:09:24.850 to keep it quiet just long enough for you to 00:09:24.850 --> 00:09:27.169 test drive it. Sawdust in the engine. Yeah, it 00:09:27.169 --> 00:09:29.429 thickens the oil and quiets the knocking. It'll 00:09:29.429 --> 00:09:31.970 work for about 20 miles. That is active concealment. 00:09:32.009 --> 00:09:35.779 That is fraud. And fraud trumps as is. Always. 00:09:35.860 --> 00:09:39.120 It simply does not matter what disclaimers are 00:09:39.120 --> 00:09:41.379 in the contract. If the contract was signed based 00:09:41.379 --> 00:09:44.700 on a lie, if it's void for fraud, the whole thing 00:09:44.700 --> 00:09:47.519 just falls apart. That's a relief. So there is 00:09:47.519 --> 00:09:50.080 a limit. You can't just be a total scam artist 00:09:50.080 --> 00:09:53.320 and hide behind as is. Yeah, you can't. But... 00:09:53.500 --> 00:09:56.139 And this is a big but. Proving fraud is difficult. 00:09:56.379 --> 00:09:58.639 You have to prove they knew. You have to prove 00:09:58.639 --> 00:10:01.799 intent. It's why relying on the express warranty 00:10:01.799 --> 00:10:04.159 on the description is often a better path for 00:10:04.159 --> 00:10:06.379 a buyer. Right. It's easier to prove the tires 00:10:06.379 --> 00:10:08.419 aren't new than to prove what was in the seller's 00:10:08.419 --> 00:10:10.559 head. Precisely. Now, let's raise the stakes. 00:10:10.759 --> 00:10:13.539 A bad used car might cost you $5 ,000, maybe 00:10:13.539 --> 00:10:17.620 $10 ,000. But people sign as -is contracts for 00:10:17.620 --> 00:10:19.860 something much, much bigger. Real estate. The 00:10:19.860 --> 00:10:22.519 real estate minefield. The source material makes 00:10:22.519 --> 00:10:23.980 a point here that I hadn't really considered. 00:10:24.360 --> 00:10:27.059 When we think of a fixer upper house sold as 00:10:27.059 --> 00:10:29.919 is, we usually think about the physical structure. 00:10:30.080 --> 00:10:33.120 The leaky roof, termites, foundation cracks. 00:10:33.500 --> 00:10:35.419 Right. We think, OK, I'll hire an inspector. 00:10:35.500 --> 00:10:37.200 We'll check the beams. And if the house is standing, 00:10:37.419 --> 00:10:40.620 I'm good. But the source here says the real danger 00:10:40.620 --> 00:10:44.559 in an as is real estate deal isn't always the 00:10:44.559 --> 00:10:47.259 bricks and mortar. It's the paperwork. That is 00:10:47.259 --> 00:10:50.360 often where the catastrophic risks hide. When 00:10:50.360 --> 00:10:53.279 you buy a property as is, you are often agreeing 00:10:53.279 --> 00:10:55.580 to take the title and the legal standing of the 00:10:55.580 --> 00:10:58.100 property with all faults as well. What does that 00:10:58.100 --> 00:11:00.340 look like in practice? How can paperwork be broken? 00:11:00.679 --> 00:11:02.659 It looks like liens. It looks like unpaid public 00:11:02.659 --> 00:11:05.279 utility fees. Liens, just to clarify, that's 00:11:05.279 --> 00:11:07.059 a debt attached to the house, right? Yes. And 00:11:07.059 --> 00:11:09.200 this is a concept that trips people up. In real 00:11:09.200 --> 00:11:11.600 estate, debt can attach to the property itself, 00:11:11.700 --> 00:11:14.179 not just the person who owns it. So let's say... 00:11:14.409 --> 00:11:16.389 The previous owner didn't pay a contractor for 00:11:16.389 --> 00:11:18.710 a renovation five years ago. That contractor 00:11:18.710 --> 00:11:21.450 put a lien on the house. And if I buy the house 00:11:21.450 --> 00:11:25.009 as is. If the deed is conveyed with an as is 00:11:25.009 --> 00:11:27.210 clause regarding the title and you didn't do 00:11:27.210 --> 00:11:30.330 your homework, you inherit those debts. You are 00:11:30.330 --> 00:11:32.710 now the proud owner of a house and the proud 00:11:32.710 --> 00:11:35.389 owner of the previous guy's unpaid bills. That 00:11:35.389 --> 00:11:38.690 is brutal. So I could buy a house for $100 ,000 00:11:38.690 --> 00:11:43.009 as is and find out it owes $50 ,000 to the city. 00:11:43.539 --> 00:11:45.919 Theoretically, yes. And the source notes that 00:11:45.919 --> 00:11:48.320 searching public records is often really difficult. 00:11:48.539 --> 00:11:50.799 It's not like looking at a car engine. And sellers 00:11:50.799 --> 00:11:52.940 often do these searches lazily. They might say, 00:11:52.960 --> 00:11:54.919 well, I don't know of any problems. If you accept 00:11:54.919 --> 00:11:57.600 that and sign as is, you are the one left holding 00:11:57.600 --> 00:11:59.980 the bag. So while you can inspect a physical 00:11:59.980 --> 00:12:02.799 structure with a flashlight and a ladder, these 00:12:02.799 --> 00:12:05.679 legal faults are invisible unless you're digging 00:12:05.679 --> 00:12:08.399 through municipal records. Correct. The as -is 00:12:08.399 --> 00:12:11.940 deed burdens you, the buyer, with the mess. It's 00:12:11.940 --> 00:12:14.299 a powerful reminder that condition means more 00:12:14.299 --> 00:12:16.320 than just physical condition. It means legal 00:12:16.320 --> 00:12:18.720 condition. It seems like the common thread here 00:12:18.720 --> 00:12:21.700 is that as is basically a request for the buyer 00:12:21.700 --> 00:12:23.759 to do all the work. That's exactly what it is. 00:12:23.899 --> 00:12:26.580 OK, so we've established that in the U .S., as 00:12:26.580 --> 00:12:31.100 is, is a powerful weapon for sellers. But is 00:12:31.100 --> 00:12:33.139 this true everywhere? I mean, if our listeners 00:12:33.139 --> 00:12:35.759 tuning in from London or Manchester, are they 00:12:35.759 --> 00:12:38.700 facing the same two minute engine seizure nightmare? 00:12:39.019 --> 00:12:41.580 This is where geography becomes destiny. And 00:12:41.580 --> 00:12:43.879 the answer is no. The U .S. approach is actually 00:12:43.879 --> 00:12:46.740 quite distinct from, say, the United Kingdom. 00:12:46.960 --> 00:12:49.720 So how does the UK handle it? The UK has a much 00:12:49.720 --> 00:12:52.220 more robust framework for consumer protection 00:12:52.220 --> 00:12:54.240 that limits this kind of blanket disclaimer. 00:12:54.539 --> 00:12:57.480 They have laws like the Unfair Terms in Consumer 00:12:57.480 --> 00:13:00.559 Contracts Regulations 1999 and the Sale of Goods 00:13:00.559 --> 00:13:03.340 Act 1979. And what do those laws say about as 00:13:03.340 --> 00:13:05.820 -is? Essentially, in many jurisdictions like 00:13:05.820 --> 00:13:08.059 the U .K., disclaiming implied warranties is 00:13:08.059 --> 00:13:11.080 just void, specifically for consumer transactions. 00:13:11.320 --> 00:13:13.000 Void, so you can't even do it. You can't just 00:13:13.000 --> 00:13:15.139 contract your way out of selling a working product 00:13:15.139 --> 00:13:17.879 to a consumer. The law there says a product must 00:13:17.879 --> 00:13:20.120 be fit for purpose and of satisfactory quality. 00:13:20.460 --> 00:13:23.179 You can't just use the words as is to exclude 00:13:23.179 --> 00:13:25.720 liability for damage or poor quality in the same 00:13:25.720 --> 00:13:28.279 sweeping way you can in the U .S. That's a massive 00:13:28.279 --> 00:13:30.980 difference. In the U .S., the contract is king. 00:13:31.500 --> 00:13:35.000 In the UK, the consumer protection laws can override 00:13:35.000 --> 00:13:37.759 the contract. To an extent, yes. It reflects 00:13:37.759 --> 00:13:39.980 a different philosophy. The U .S. system leans 00:13:39.980 --> 00:13:42.559 heavily on the freedom of contract, even if that 00:13:42.559 --> 00:13:45.519 means you are free to make a terrible deal. The 00:13:45.519 --> 00:13:47.980 U .K. system leans more on ensuring the consumer 00:13:47.980 --> 00:13:50.610 isn't taken advantage of. You mentioned the U 00:13:50.610 --> 00:13:52.889 .S. courts wrestling with this. Is there a case 00:13:52.889 --> 00:13:55.750 that shows how hard the U .S. leans into this 00:13:55.750 --> 00:13:59.009 contract is king idea? There's a famous case 00:13:59.009 --> 00:14:01.049 mentioned in our notes, Lenawee County Board 00:14:01.049 --> 00:14:04.159 of Health v. Messerly. It's pivotal. Okay, walk 00:14:04.159 --> 00:14:06.200 us through it. What happened? So the Messerleys 00:14:06.200 --> 00:14:08.480 bought an apartment -baiting investment property. 00:14:08.639 --> 00:14:11.440 They bought it as is. But shortly after buying 00:14:11.440 --> 00:14:13.460 it, the Board of Health condemned the property. 00:14:13.700 --> 00:14:16.059 Why? Turns out the septic tank system was illegal 00:14:16.059 --> 00:14:18.460 and because of the land, essentially impossible 00:14:18.460 --> 00:14:21.139 to fix. You couldn't legally inhabit the building. 00:14:21.379 --> 00:14:23.220 So they bought a rental property that they were 00:14:23.220 --> 00:14:25.279 legally forbidden from renting. Exactly. The 00:14:25.279 --> 00:14:27.240 property was worthless. It had a negative value. 00:14:27.500 --> 00:14:29.919 So the Messerleys tried to sue to rescind the 00:14:29.919 --> 00:14:32.690 contract. Their argument was mutual. mistake. 00:14:33.029 --> 00:14:35.730 Mutual mistake. Yeah. They argued that neither 00:14:35.730 --> 00:14:38.549 they nor the seller knew how bad the septic tank 00:14:38.549 --> 00:14:41.269 was. They said, we both thought we were dealing 00:14:41.269 --> 00:14:43.490 with a valuable building. Since we were both 00:14:43.490 --> 00:14:46.429 wrong, the contract should be void. That seems 00:14:46.429 --> 00:14:49.129 reasonable. If nobody knew, it's an honest mistake. 00:14:49.429 --> 00:14:51.549 That's what they thought. But the court ruled 00:14:51.549 --> 00:14:54.049 against them. Really? The court said because 00:14:54.049 --> 00:14:57.129 they signed an as -is clause, the risk of unknown 00:14:57.129 --> 00:15:00.009 defects. Even defects that made the property 00:15:00.009 --> 00:15:02.950 totally useless was assigned to the buyer. The 00:15:02.950 --> 00:15:05.190 court basically said you accepted the risk that 00:15:05.190 --> 00:15:07.330 the property might be worthless when you sign 00:15:07.330 --> 00:15:10.529 those words. So even if the mistake ruins the 00:15:10.529 --> 00:15:14.269 value entirely, as is, sticks. In the U .S., 00:15:14.269 --> 00:15:16.710 yes. That case is taught in law school to show 00:15:16.710 --> 00:15:19.490 just how powerful that risk allocation is. It 00:15:19.490 --> 00:15:21.549 didn't matter that it was a mistake. The contract 00:15:21.549 --> 00:15:23.570 assigned the risk of mistake to the buyer. That 00:15:23.570 --> 00:15:26.610 is a sobering story. It really highlights how 00:15:26.610 --> 00:15:28.509 careful you have to be depending on where you 00:15:28.509 --> 00:15:30.429 were standing when you signed the paper. Absolutely. 00:15:30.690 --> 00:15:33.629 So what does this all mean for us? For you, the 00:15:33.629 --> 00:15:36.210 listener, we've looked at the car, the house, 00:15:36.330 --> 00:15:39.429 the law, and the map. I think we can synthesize 00:15:39.429 --> 00:15:43.029 this into a clear reality check. As is, is a 00:15:43.029 --> 00:15:45.429 request. It is a request from the seller for 00:15:45.429 --> 00:15:48.669 you, the buyer, to take on all of the risk in 00:15:48.669 --> 00:15:51.429 exchange for the item. And usually in exchange 00:15:51.429 --> 00:15:54.309 for a lower price. Right. That's the tradeoff. 00:15:54.730 --> 00:15:57.909 You get a deal, but you become the insurer. You 00:15:57.909 --> 00:16:00.529 become the warranty provider. So the practical 00:16:00.529 --> 00:16:02.610 takeaway here is simple. Due diligence isn't 00:16:02.610 --> 00:16:06.509 just a nice to have. No. When you see as is, 00:16:06.669 --> 00:16:09.389 due diligence is your only protection. You cannot 00:16:09.389 --> 00:16:11.950 rely on the law to save you after the signature. 00:16:12.110 --> 00:16:14.970 You have to inspect. You have to read the description 00:16:14.970 --> 00:16:17.389 and compare it to reality. You have to check 00:16:17.389 --> 00:16:19.549 the public records for loons. You have to be 00:16:19.549 --> 00:16:22.389 paranoid. Paranoia is good. Paranoia saves you 00:16:22.389 --> 00:16:25.019 money. In this context, absolutely. It's fascinating 00:16:25.019 --> 00:16:27.179 because it forces us to really look at the mechanics 00:16:27.179 --> 00:16:29.700 of how we buy and sell. It raises a provocative 00:16:29.700 --> 00:16:31.779 question about the market, doesn't it? I mean, 00:16:31.779 --> 00:16:34.399 we have to ask ourselves, does this buyer beware 00:16:34.399 --> 00:16:36.980 approach actually keep the market efficient? 00:16:37.240 --> 00:16:40.120 Well, if sellers were responsible for everything 00:16:40.120 --> 00:16:43.820 forever, if you could return a used car five 00:16:43.820 --> 00:16:46.539 years later because it broke, would anyone ever 00:16:46.539 --> 00:16:50.059 sell a used car? Or would the prices be so high 00:16:50.059 --> 00:16:52.139 to cover that risk that nobody could afford them? 00:16:52.240 --> 00:16:54.879 That's the tension. Efficiency versus protection. 00:16:55.559 --> 00:16:58.899 And right now, the as -is sticker puts the weight 00:16:58.899 --> 00:17:00.919 of that tension squarely on your shoulders. It 00:17:00.919 --> 00:17:03.059 does. It keeps the gears of commerce moving, 00:17:03.159 --> 00:17:05.920 but sometimes it grinds the individual buyer 00:17:05.920 --> 00:17:08.259 up in the process. So the next time you see those 00:17:08.259 --> 00:17:10.400 two little words on a contract or a car window, 00:17:10.599 --> 00:17:12.420 don't just gloss over them. Treat them like a 00:17:12.420 --> 00:17:15.400 stop sign. Stop. Look. And for the love of everything, 00:17:15.579 --> 00:17:17.859 check the engine. And the public records. And 00:17:17.859 --> 00:17:20.019 the public records. That's it for this deep dive. 00:17:20.160 --> 00:17:22.539 Read the fine print, everyone. Always. We'll 00:17:22.539 --> 00:17:23.019 see you next time.