Warranty Coverage in Your Purchasing Agreement

Buyers' Training
February 18, 2013 — 991 views  
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Sellers are liable to provide warranty for all products that are sold by them. Sellers offer a warranty that the goods offered by them meet the specifications and are in proper working condition. A contract to sell goods contains the warranty that the goods are actually owned by the sellers. Even if this warranty is not present in the contract, it is considered as an implied warranty. Product warranty is same as warranty provided through contract, and offers assurance from the seller, which can be depended upon by the purchaser. The warranty can be accompanied by accompanying disclosures that qualify the warranty.

Warranty Provisions in Agreements

The warranty provision in a sales contract should contain assurance that defined specifications are met by the product being sold, and that the product does not have any defects either in its material or its construction. It should specify the warranty period. If left unspecified, it will follow the statutes in your region. The warranty conditions should explicitly mention whether implied guarantees are included or excluded. The remedy in case of breach of warranty should be clearly mentioned.

Will the seller replace or repair the defective parts? Will the seller refund the purchase cost of the product? It is important to have these clauses in the warranty terms to ensure that the buyer can claim breach of warranty in case a breach occurs. In case of disclosures made by the seller, the buyer has to make sure there is an indemnity clause in the contract. The buyer should make sure the warranty terms cover any risks that he can foresee.

Warranties and Representations

Representations and warranties are present in every contract, and both serve to present facts about the concerned product with respect to the contract. A representation is a statement of facts and any other information like allegations or arguments related to a product. They present all the information about a product, from the past right upto the present. These facts help to motivate a buyer to buy the particular product. Representations are non-warranted facts about a product. A warranty assures that the product is defect-free and that the seller is willing to fix defects that may crop up for a specified time period.

Difference between Warranty and Indemnity

A breach of warranty leads to a successful claim when the buyer is able to prove that warranty conditions were breached and there was a quantifiable loss. The seller will be liable for the amount that compensates for the loss suffered by the buyer. An indemnity promises that the buyer will be reimbursed in case a particular type of liability arises. In this way, an indemnity helps the buyer to be assured of guaranteed compensation in the cases where breach of warranty may not lead to claim over damages.

In case of a warranty, buyer has to prove that losses have been incurred, but in case of indemnity, buyer can recover losses without having to prove them. A buyer is responsible for reducing losses that have occurred as a result of breach of warranty, but not so in case of indemnity. In certain transactions, disclosures are made against warranties, but in case of indemnity, such disclosures are not made.

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