In Raysoni v. Payless Auto Deals, LLC, et al., No. S13G1826 (Ga., November 17, 2014), a purchaser of a used vehicle alleged that Payless Auto Deals, LLC (“Payless”) and its salesman orally misrepresented that the vehicle had not been in an accident, when, in fact, it had previously sustained significant frame damage.  Before purchasing the vehicle, the purchaser had been told by a salesperson that nothing was wrong with the vehicle and was also presented with an inaccurate Carfax report which stated the same.  In the underlying action, Payless moved for judgment on the pleadings, contending that the terms of the written contract rendered any such reliance unreasonable as a matter of law, in part because of certain disclaimers in the contract, which read, in fine capitalized print: “NO SALESMAN VERBAL REPRESENTATION IS BINDING ON THE COMPANY;”  and “WE STRONGLY RECOMMEND CUSTOMERS SHOULD GET VEHICLE INSPECTED BY A MECHANIC OF THEIR CHOICE BEFORE MAKING THE PURCHASE.”

The trial court awarded, and the Court of Appeals affirmed, judgment on the pleadings in favor of Payless.  However, the Georgia Supreme Court reversed this ruling and held that the purchaser was entitled to move forward with his fraud claim.  The Georgia Supreme Court noted that the disclaimers contained in the sales contract amounted to a partial merger clause and could only prevent reliance on verbal representations.   However, the purchaser relied not only on verbal representations that the car was accident-free, but on a faulty Carfax report, as well.  The Supreme Court found that the contract disclaimers are not absolute or unequivocal enough to warrant judgment on the pleadings, particularly because the purchaser relied on both written and verbal misrepresentations. 

In a footnote, Justice Blackwell noted that although the contract disclaimer language was capitalized, it also appears in extremely fine print (which plaintiffs estimate at 5.6 points), making it difficult to read.  Moreover, the Court noted, the capitalized disclaimers are mixed with a “hodgepodge” of other seemingly unrelated, boilerplate contractual provisions – all of which are capitalized and in the same font. 

 As lenders frequently rely on waiver language, merger clauses, and other boilerplate contract disclaimer language when enforcing promissory notes and guaranties, it is interesting to consider how this ruling might potentially expand to impact these sorts of contract terms.  Although the Georgia Supreme Court did not specifically hold that the fine-print disclaimer language is unreasonable or renders the contract or these terms unenforceable, it did note that the language was difficult even for the “author of this opinion” to read.  The Court’s disfavor towards this sort of fine-print warranty is clear.  Georgia Lenders might want to avoid fine print disclaimers, and be sure to clearly label and express such contractual provisions in order to ensure they will be enforced.