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 New Mexico, as in other states, disclaimers in contracts are used to limit or exclude warranties that might otherwise be implied by law. Under the Uniform Commercial Code (UCC), which New Mexico has adopted, a seller can disclaim implied warranties of merchantability or fitness for a particular purpose, typically through conspicuous language such as 'as is' or 'with all faults' in the contract. However, the disclaimer must be presented in a clear and unambiguous manner to be effective. New Mexico law, specifically under the New Mexico Uniform Commercial Code (NM UCC), allows for such disclaimers but they must comply with certain requirements to ensure that they are given knowingly and willingly by the buyer. The NM UCC also provides for the possibility of implied warranties arising from course of dealing or usage of trade. It's important to note that while disclaimers can limit liability for sellers, they cannot be used to exclude all types of liability, especially in cases of gross negligence or intentional misconduct. Additionally, consumer protection laws at both the state and federal level may impose limitations on the ability to disclaim warranties for consumer goods.