As a general rule, parties to a commercial contract are free to disclaim any warranties for the product being sold. However, there are several rules regarding the method of the disclaimer and the type of warranty, either express or implied.
Express warranties are created by statements from the seller. This can include:
- An affirmation of fact or a promise which relates to the goods;
- A description of the goods;
- A sample or model used in the transaction.
Any statement that describes the product or otherwise impacts the decision to complete the transaction can create a warranty, and it is not necessary that there be an intent to create the warranty.
An express warranty can be disclaimed quite easily by statements in brochures, models, and samples stating that no warranty is created by those terms. Also, salesmen must be careful not to make any verbal promises without such a condition. Express warranties can also be disclaimed by statements in a contract for a sale excluding any express warranties.
There are also certain warranties that are implied by law. There are two main types of implied warranties:
- The implied warranty of merchantability guarantees that the product is fit to use for the ordinary purposes that buyers would intend to use it;
- The implied warranty of fitness for a particular purpose applies when the buyer intends to use a product for a specific purpose and the seller knows this, and the buyer relies on the seller’s expertise to choose a product for this use.
Implied warranties can also be disclaimed in most places, though there are federal restrictions and some state laws limiting disclaimers on consumer goods. To disclaim implied warranties, the seller must inform the buyer in writing that the seller would not be liable if the product is defective or does not perform as the buyer believed it would.
Alternatively, the seller can label a product as being sold "as is" or "with all faults" which will disclaim implied warranties, but not remove liability for defective or dangerous products. There are also some restrictions on selling "as is" products depending on the state.
The law of contracts and warranties can be very complex and differ dramatically from state to state. An experienced business attorney can help in drafting a contract to exclude warranties, or advise you of any warranties you may have for an already purchased product. A lawyer can also represent you in court if needed.