Breach of warranty: Overview, definition, and example
What is breach of warranty?
Breach of warranty occurs when one party fails to fulfill a promise or guarantee made in a contract. A warranty is a contractual assurance that certain conditions, qualities, or standards will be met. If these assurances turn out to be false or are not met, the party relying on the warranty may have the right to seek compensation or other legal remedies.
For example, if a manufacturer sells a product with a one-year warranty guaranteeing that it will be free from defects, but the product stops working after two months due to poor craftsmanship, this could be considered a breach of warranty.
Why is breach of warranty important?
A breach of warranty is important because it protects parties from false claims or unmet expectations in contracts. It allows the affected party to seek compensation, demand a replacement, or, in some cases, terminate the agreement.
For businesses, warranty clauses help establish trust and accountability. Clear terms outlining what qualifies as a breach and the remedies available ensure that both parties understand their rights and obligations.
Understanding breach of warranty through an example
A company purchases 100 laptops from a supplier, with a warranty stating that all devices will function properly for at least two years. However, after six months, several laptops begin malfunctioning due to a manufacturing defect. Since the supplier guaranteed their quality, the company can claim a breach of warranty and request repairs, replacements, or compensation.
In another example, a construction firm hires a contractor to install roofing on a commercial building. The contract includes a five-year warranty on materials and workmanship. If leaks occur within a year due to poor installation, the contractor may be required to repair the damage at no additional cost, as failing to meet the warranty would be considered a breach.
Example of a breach of warranty clause
Here’s how a breach of warranty clause might appear in a contract:
“If any product or service provided under this Agreement fails to meet the warranties set forth herein, the party providing such warranty shall, at its own expense, repair, replace, or refund the defective product or service. Claims for breach of warranty must be made within [X] days of discovering the defect.”
Conclusion
Breach of warranty occurs when a promised guarantee in a contract is not met, allowing the affected party to seek remedies such as repairs, replacements, or financial compensation. Warranty clauses provide legal protection by ensuring that products and services meet agreed-upon standards. Including a clear breach of warranty clause in contracts helps manage risks and prevents disputes over quality and performance issues.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.