Disclaimers in contracts are generally included when one party wants to sell a product or service without any guarantee of its quality (merchantability) or suitability for the buyer’s intended use. Guarantees of a product’s quality or suitability are also known as warranties, and may be implied in the parties’ agreement without being written or spoken—usually by virtue of a state’s statutes adopting the Uniform Commercial Code’s provisions governing the sale of goods (Article 2)—or by court opinions (also known as common law or case law). Some states have laws (statutes) that prohibit the disclaimer of warranties; make disclaimers ineffective; and penalize parties who attempt to disclaim such warranties. Disclaimers in contracts also serve as an explicit warning to the parties of the risks in a sale or transaction and help avoid a subsequent claim that a party was unaware of such risks or was deceived regarding the presence of such risks.

In California, disclaimers in contracts are subject to both the California Commercial Code (which is based on the Uniform Commercial Code) and consumer protection laws. Under the California Commercial Code, particularly Section 2316, parties can disclaim implied warranties, including the warranty of merchantability and the warranty of fitness for a particular purpose, but the disclaimer must be conspicuous and specific. For example, the word 'merchantability' must be mentioned if the warranty of merchantability is being disclaimed. Additionally, California's consumer protection laws, such as the Song-Beverly Consumer Warranty Act, provide that for consumer goods, the implied warranty of merchantability cannot be disclaimed or modified for a new product for at least 60 days and up to one year after the sale. Furthermore, disclaimers must not be deceptive and must comply with the federal Magnuson-Moss Warranty Act, which governs consumer product warranties. Penalties for violating these provisions can include consumer remedies such as repair, replacement, or refund of the purchase price, and in some cases, the awarding of damages and attorney's fees.