By Janeia Brounson
If you’ve negotiated a contract, chances are you’ve encountered a warranty provision. Nearly all contracts for the purchase of goods or services contain some form of a warranty, which typically requires you to guarantee your work and repair or “make good” your work if there are any defects.
While warranties are common, no one wants to be surprised by warranty obligations that they did not consider.
Let’s review some standard warranty language commonly found in automation contracts and some ways you can limit your warranty obligations.
- Highest standards: The contract requires the work or deliverables to meet the “highest” standards, “state of the art,” or other high-quality standards. This type of warranty language imposes a higher standard than what is customary in the industry.
Consider changing this language to a lower standard, requiring the work or deliverables to meet standards customary within the industry and locality for the type of work in question.
- Free from defects: The contract requires the work or deliverables to be “free from defects.” While this language is common, you are agreeing to correct any defect that arises, no matter how small, even if the defect is caused by your compliance with the other party’s specifications.
Consider limiting the language to “material” defects, warranting that the work and deliverables will be free from material defects in design, workmanship and materials except to the extent caused by compliance with the other party’s specifications or design criteria.
- Subjective warranties: The contract requires the deliverables to be “fit for the purposes intended” or enforces a subjective standard based on the satisfaction of the other party. This subjective language creates a moving target as the other party gets to decide what is acceptable. Consider seeking to strike this language.
- Warranty of third-party products: The contract does not include an exception for products or deliverables supplied by third parties. Ideally you should only “pass along” such third party’s warranty.
Consider including language in the contract that makes it clear that the other party is only receiving the warranty granted by such third party.
The warranties you agree to under a contract will create obligations that could haunt you for years to come. The next time that you encounter a warranty provision, consider these negotiation tips and make sure that you fully understand what is expected of you.
Janeia Brounson is an attorney with Faegre Drinker, counsel to the CSIA and many of its members. She can be reached at Janeia.Brounson@faegredrinker.com.
For more information about the CSIA Legal Plan for members, see https://www.faegredrinker.com/en/areas/the-csia-legal-plan.
