Which statement about disclaims warranties of merchantability is correct?

• A. A conspicuous disclaimer mentioning 'merchantability' is effective
• B. As is disclaimers are never effective
• C. Warranties cannot be disclaimed by any means
• D. Disclaimers must be made only verbally

Answer: (A)

Disclaiming the implied warranty of merchantability works when the disclaimer is clearly written, conspicuous, and explicitly mentions merchantability. The key idea is that the buyer must be put on notice that the seller is limiting or excluding the implied warranty, and that notice must be clear and in writing. A conspicuous disclaimer that uses the word “merchantability” accomplishes this, making the disclaimer effective.

As is disclaimers can be effective too, but only if they meet the same requirements—they must be in writing and conspicuous and clearly address merchantability. The statement that such disclaimers are never effective is false, because properly worded “as is” disclosures can negate the implied warranty.

Warranties can be disclaimed by proper means under the UCC; the blanket claim that they cannot be disclaimed is incorrect. Disclaimers do not have to be verbal only; they must be in writing and conspicuous, so a contract or label stating the disclaimer satisfies the rule.