## Facts

- Clarklift leased a used forklift to Heart Truss & Engineering Corp. for three months; Heart later purchased the forklift.
- Sale documents (work order and purchase invoice) stated in writing: “WARRANTY: AS IS, NO WARRANTY.”
- After the sale, the forklift malfunctioned and allegedly caused two fires at Heart’s facility.
- Lumber Mutual, Heart’s commercial property insurer, paid the fire loss and sued Clarklift as Heart’s subrogee.
- The suit alleged, among other claims, breach of implied warranties of merchantability and fitness for a particular purpose under UCC Article 2 (as adopted in Michigan).

## Issues

1. Whether the written “WARRANTY: AS IS, NO WARRANTY” clause effectively disclaimed the implied warranties of merchantability and fitness under UCC § 2-316.
2. Whether the disclaimer was sufficiently conspicuous to be enforceable.
3. Whether a subrogated insurer may avoid a warranty disclaimer that would bar the insured’s implied-warranty claims.

## Decision

- The Michigan Court of Appeals affirmed summary disposition for Clarklift under MCR 2.116(C)(10).
- The court held the “AS IS, NO WARRANTY” language excluded all implied warranties under UCC § 2-316(3)(a).
- The court held the disclaimer was conspicuous because it appeared on the face of the documents in capital letters and was repeated.
- The court held Lumber Mutual, as subrogee, could not obtain greater rights than Heart and was bound by the same disclaimer.

## Legal Principles

- Implied warranties of merchantability and fitness generally arise in contracts for the sale of goods unless effectively excluded.
- Under UCC § 2-316(3)(a), expressions such as “as is” may exclude all implied warranties when the language calls the buyer’s attention to the exclusion and makes plain that no implied warranty is given.
- A written warranty disclaimer must be conspicuous when the UCC requires conspicuousness; capitalized, plainly stated terms on the face of transactional documents may satisfy that standard.
- A subrogee “stands in the shoes” of the subrogor and takes the claim subject to defenses and contractual limitations that would bind the insured.

## Conclusion

The court enforced a conspicuous “WARRANTY: AS IS, NO WARRANTY” clause in a used-equipment sale to bar implied-warranty claims and held that the insurer, suing in subrogation, was subject to the same disclaimer, making summary disposition proper.


Lumber Mut. Ins. Co. v. Clarklift of Detroit, Inc., 224 Mich. App. 737, 569 N.W.2d 681 (Mich. Ct. App. 1997)