In this multi-part series, we highlight key contract issues for today’s business owners, including:
- The Indemnification Clause
- Insurance Provisions
- Warranty Language
- Choice of Law and Choice of Venue
Warranty Language
Warranties should be crafted specifically for the needs and desires of a specific business. The warranty you provide should be something that you want to provide and that is specifically tailored to the nature of your product. In order to best avoid unanticipated obligations, exercise caution and attention to detail in your warranty language.
Implied Warranty of Fitness for a Particular Purpose
You have undoubtedly come across several classic warranties in your business dealings, due either to asking that a warranty be provided to you or being asked by a buyer to provide one to you. One warranty worth highlighting is the implied warranty of fitness for a particular purpose:
“Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods, there is unless excluded or modified under the next section an implied warranty that the goods shall be fit for such purpose.”
In other words, the implied warranty of fitness for a particular purpose occurs when the seller is aware of the buyer’s intended purpose for the product purchased and guarantees that the product will be suitable for that purpose.
Don’t “Over-Warrant”
In some professional scenarios, it is entirely appropriate to provide this warranty to your buyer.
However, be careful that you are not asked to provide guarantees outside your power to manage.
For example, if your business builds parts based on prints or plans designed and provided by your buyer – while it would be reasonable for you to warrant that the parts you manufactured run true to the print – you would not want to warrant that the parts are “fit for a particular purpose.”
“Over-warranting” products in scenarios such as this can lead to increased liability.
Be Deliberate About Length
The length of the warranty is an important consideration. Be deliberate about the length of the warranty that you provide (or ask for).
You may be willing to provide a lifetime warranty, but it may not be appropriate for your product. When making this decision, be realistic about the durability of your product.
Be Cautious When Providing Remedies
It is also important to consider the remedies provided through your warranty. Are you warranting the replacement of a product, or are you warranting a refund of the cost? You may also be asked to provide “cover” damages when a buyer has the option of replacing the product, making you responsible to cover (or make up the difference in) the costs for the buyer.
Depending on the product type, unanticipated implications of a warranty with non-specific language can be extensive. Ensure that the language used in your contract is appropriate for your product and, to best avoid unintended obligations, seek the assistance of an attorney with experience in negotiating commercial contracts.
Pittsburgh Corporate Attorneys
Dan Lynch is the Founder and Managing Partner of The Lynch Law Group. With questions about business contracts, warranties, or other legal matters, contact him at 724-776-8000 or via email at dlynch@lynchlaw-group.com.
