“AS IS” MEANS “AS IS,” BUT “LIKE NEW” DOESN’T MEAN “JUST LIKE NEW”

CAS, Ltd. v. TM Aviation Partners, LP
Dallas Court of Appeals, No. 05-15-779-CV (August 4, 2016)
Justices Bridges (Opinion), Lang, and O’Neill

Kelli Hinson

Gregory Coy, the president of CAS, was in the market for a set of used aircraft floats to pass along to an overseas client. He agreed to purchase a set from TM Aviation, which had bought them from a third party several years before but had never taken possession of them. Timothy Thompson from TM Aviation had advertised the floats as “like new” and passed along photos of the floats he had received when he originally purchased them. But he disclosed to Coy that he had never actually seen the floats, and he encouraged Coy to inspect them.

Coy decided to purchase the floats on behalf of CAS without inspecting them first and drafted up a bill of sale providing the floats were to be sold “as is, where is, … without warranties expressed or implied.” After Coy had the floats delivered, he was disappointed in their condition and sued TM Aviation for breach of contract, breach of warranty, fraud, and violations of the DTPA. The trial court entered a take-nothing judgment in favor of TM Aviation.

CAS appealed, arguing it was fraudulently induced to enter into the “as is” contract. A seller “cannot have it both ways: he cannot assure the buyer of the condition of a thing to obtain the buyer’s agreement to purchase ‘as is,’ and then disavow the assurance which procured the ‘as is’ agreement.” So, whether an “as is” clause should be given effect is based on the totality of the circumstances, including whether the “as is” clause was boilerplate or an important basis of the bargain, the relative sophistication of the parties, and other representations made by the parties. Here, the Court focused on the facts that the parties were both sophisticated businessmen with years of experience buying and selling aviation parts and that CAS was the party who drafted the bill of sale, which included the “as is” provision.

The Court rejected CAS’s argument that TM Aviation’s description of the floats as “like new” was a material misrepresentation. Distinguishing a case in which the Texas Supreme Court held that advertising a boat as “just like new” was an actionable misrepresentation, the Dallas Court concluded that “just like new” means “exactly like new,” whereas “like new” merely means “in very good condition.” In light of the fact that both parties in this case understood the floats were over 30 years old, the Court held the phrase “like new” was “more of a vague representation constituting a mere opinion” and was not sufficiently definite to constitute a material misrepresentation. So CAS could not avoid the “as is” clause, and the take nothing judgment was affirmed.