A warranty is a promise of performance that is written into a contract. They are often express promises related to quality of product or workmanship. A properly worded warranty is a good marketing tool for your company and will also provide you with protection against customer claims.
When drafting a warranty, consider the following:
Be careful what you promise
- Promise only what you can and will fix, refund, supply, etc.
- Don’t fix someone else’s work
- Restrict the warranty to the cost of repairs/replacement of materials or work only
Restrict time limits
- Fix a deadline for claims under the warranty (e.g. 1 year, 6 months)
- Require your customer to provide written notice of a claim within a certain number of days of discovery; no written notice of the claim, no remedy under the warranty – this also permits you to assess the problem when it first surfaces and damage is reduced
Restrict damages
- Not responsible for water damages caused by failure of products/installations
- Not responsible for mold, mildew, fungi, air quality problems
- Not responsible for business losses
- Not responsible for damages to third parties
Restrict application
- Not responsible if someone else tampers with the work
- Not responsible if proper maintenance/care was lacking
- No warranty on colour fastness, appearance, mechanical damages by others, disintegration of substrata, etc.
- No warranty if full payment for work was not received
A well written warranty is a marketing feature for your customers. At the same time, it will make clear and limit your responsibilities to your customers on completion. Take some time to ensure that this promise is one you can keep!
Jessica Gahtan is the 2020/2021 Articling Student at Goldman Sloan Nash & Haber LLP.
These comments are of a general nature and not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer.