Warranty

A warranty is a promise or assurance given in contract by a party to the other party to the contract.

A warranty is an obligation or guarantee that goods sold or services provided are as factually stated or legally implied by the provider. The warranty may also allow for a repair or replacement in the event the article or service does not meet the warranty.

Should the product prove to be defective or not meet the purchaser's expectations then a breach of warranty is said to have occurred.

Some warranties are implied by statute by default. The words do not need to appear in the text of the contract where it is written, or the contract is oral or verbal. For instance, the Sales of Goods Act 1979 implies warranties for the quiet enjoyment of goods purchased and that the goods will be of merchantable quality, amongst others. These warranties may be excluded in contracts between businesses but not contracts with consumers.

In a contract for the sale of goods, if the warranty is breached the purchaser is entitled to claim for damages. It does not give the purchaser the right to turn down the goods and treat the contract as repudiated.

A condition, as opposed to a warranty, is part of the root of the contract and allows the injured party to rescind and/or seek damages. For instance in a contract for a shipment to be delivered where time is stated to be 'of the essence', a term stating the deadline for shipment would probably be a condition

Warranties may be express or implied.

It is important to differentiate between a warranty and a condition as there are usually different remedies according to whether a warranty is breached or a condition is breached.

Breach of warranty;

An innocent party is only entitled to sue the party in breach of a warranty, for damages for the breach of warranty.

Breach of a condition;

An innocent party in breach of a condition of contract may elect to

  1. accept the breach and sue for damages, or

  2. Terminate the contract (for the other party's repudiation of the contract) and sue for damages. 

before terminating a contract however, the innocent party must not have accepted the breach by conduct or words.

Also, stipulations in contracts may be conditions of the contract although they are named as warranties in the agreement.

It may be that the contract will just state whether a term in the contract is a condition or a warranty.

If it is not clear within the contract it will be decided based on the intention of the parties at the time the contract was made.







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