Warranties in Contracts: What They Promise and What They Don't

What Is a Warranty?

A warranty is a promise or guarantee within a contract that certain facts are true or that certain standards will be met. If a warranty turns out to be false, the party that made it may be liable for damages — even without intent to deceive.

Types of Warranties

• Express warranties: Specific promises made in the contract. For example, "The software will function as described in the specifications for 12 months."
• Implied warranty of merchantability: Under the Uniform Commercial Code (UCC), goods sold by a merchant must be fit for their ordinary purpose. This applies automatically unless disclaimed.
• Implied warranty of fitness for a particular purpose: If the seller knows the buyer needs the goods for a specific use and the buyer relies on the seller's expertise, the goods must be suitable for that purpose.

Warranty Disclaimers

Many contracts include warranty disclaimers, often in capital letters. Common language includes:

• "AS IS" — the product or service is provided without any warranties
• "WITH ALL FAULTS" — the buyer accepts any defects
• "DISCLAIMER OF IMPLIED WARRANTIES" — the seller rejects implied warranties of merchantability and fitness

Under the UCC, implied warranties can be disclaimed if the disclaimer is conspicuous and uses specific language. However, some consumer protection laws limit the ability to disclaim warranties.

Warranties vs. Representations

Though often used interchangeably, there is a legal distinction:

• Warranty: A contractual promise that provides a remedy if breached
• Representation: A statement of fact that, if false, may give rise to a claim for misrepresentation

Contracts often include both "representations and warranties" to cover both bases.

Red Flags

• Blanket "as is" disclaimers that eliminate all warranties, including express promises made during negotiations
• Warranty periods that are unreasonably short
• Warranties that the other party cannot practically verify
• Missing warranties about ownership, authority to enter the contract, or compliance with laws

When to Consult a Lawyer

Consider consulting an attorney if you are purchasing goods or services with broad warranty disclaimers, if the warranty period seems inadequate for the product's expected lifespan, or if you are unsure whether implied warranties have been properly disclaimed.

This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney for guidance specific to your situation.