tourniquetA tourniquet stems blood loss from a wound – and in contract terms it represents the warranty, and the remedies available to the customer to put things right if a warranty is breached.

In layman’s terms, a warranty is effectively a guarantee that a product or service will meet particular criteria. Legally, the word ‘warranty’ is used to describe a term of a contract that, if breached, entitles the other party to damages but doesn’t entitle them to terminate the contract for breach.

There are some statutory warranties that will automatically apply to the sale of products unless the contract states that they are specifically excluded. These are that the goods will be of satisfactory quality, fit for purpose and free from defects in materials and workmanship.

While these might all seem like reasonable things to warrant, it is generally better for the supplier that these warranties are excluded, as they are rather ambiguous and open to different interpretations. For example, something that is of ‘satisfactory quality’ when you’ve paid £5 for it might be considerably less than ‘satisfactory’ if you’ve paid £500 for it!

However, if these statutory warranties are excluded, it is important to replace them with a defined, specific warranty suitable for the products being supplied, as described below. If the customer is not given any warranty at all, a Court may judge the exclusion to be unreasonable and default to the statutory position.

In respect of services, that statutory warranty is that services will be delivered with reasonable care and skill. Again, you may wish to be more specific here – “by persons appropriately skilled and experienced for the tasks to which they are assigned”, for example.

When giving or receiving a warranty, it’s important to be clear about:

  1. precisely what is being warranted (compliance with a written specification is a good place to start); and
  2. the duration of the warranty (does it apply forever? For 30 days? For a year?); and
  3. the start date of the warranty period (the date of the contract? The delivery date? The acceptance date?); and
  4. the warranty remedies (repair or replacement free of charge? Fixing a problem with software?).

If you’re talking about a physical product, state how any repair or replacement will occur. Does the customer send it back to the supplier, or must the supplier repair/replace onsite? Is transport both ways at the supplier’s cost, or does the customer pay for carriage to the supplier, and the supplier pays for the return journey? What about customs clearances, if the equipment has been shipped overseas?

It’s also worth thinking about the ‘last resort’ in case the supplier is unable to fix the problem. Given that breach of warranty does not automatically entitle the customer to terminate, is it worth specifying that if, after trying to remedy the problem in the specified ways, the supplier is not able to do so, the contract can terminate and the customer can be reimbursed the money paid?

Want to know more? Contact Devant for contract assistance!