A warranty is an express written guarantee that the manufacturer or distributor of a product provides to the buyer of the product. In one type of warranty, a manufacturer or distributor promises to repair or replace the product if it does not perform as promised or proves to be defective. Parties to a commercial transaction may have a warranty contract that spells out all of the guarantees that comprise their deal.
The manufacturer or distributor usually promises to do this within some specified period of time. Sometimes, the manufacturer or distributor offers this warranty for a price. For example, car manufacturers and dealers commonly offer motor vehicles for sale with a warranty for parts and labor for a period of 1 or more years. It is commonly understood to be a promise to repair the vehicle if it develops a mechanical problem.
Another kind of warranty is that of a party to a contract that warrants or guarantees something regarding the performance of the contract. For example, the seller of an item may guarantee that the item they sell is in the condition that is promised or represented in the contract.
When a person sells real property, they may warrant, or guarantee, in the form of a covenant that they bind themselves and their heirs to provide the buyer with the interest conveyed in the deed. The party to a contract may make a promise in a provision of the contract. If the party breaches this promise and fails to fulfill it, the provision entitles the non-breaching party to damages but not to treat the contract as null and void.
Warranties can be implied as well as express. For example, one very important implied warranty is the implied warranty of merchantability. This warranty is not stated explicitly in contracts for the sale of goods. Rather, it is implied in the transaction by law. This implied commercial warranty provides that a seller of goods guarantees that they are “merchantable.” This means that they are generally of acceptable quality.
What this implied warranty means in practice differs from transaction to transaction. However, it generally means that the items sold are of a quality that the average buyer would consider acceptable and fit for purpose. So, for example, most of the items would be free of defects. Perhaps only a few items would have a minimal defect of some type.
Another warranty that is implied in commercial contracts for the sale of products is the implied warranty of fitness for a specific purpose. It tells the buyer of a product that it is fit for the buyer’s particular purpose. It means that the buyer can depend on the seller to provide a product that is fit for the use that the buyer intends to make of it.
The Magnuson-Moss Warranty Act (MMWA) is a federal law that applies to warranties for consumer products. The MMWA requires manufacturers and distributors of consumer products are required by the MMWA to tell consumers about their warranty rights. The MMWA also specifies certain duties and obligations that sellers have in connection with their product warranties. Because it is a federal law, it applies in all states.
In real estate law, in most states, every lease for residential real property contains an implied warranty of habitability. Under this warranty, a landlord must maintain their residential units in a habitable condition. Again, this warranty applies to a residential lease transaction even if the lease does not expressly state this.
It means that the landlord must make repairs and maintain the units they lease to tenants.
What Is a Warranty Disclaimer?
A warranty disclaimer clause is a statement that informs the recipient of a warranty that the person who has made it disavows it or is not bound by the warranty or any guarantees or promises that may have been made. Disclaiming a warranty can be accomplished after a warranty has already been released in order to retract the previous warranty, or it can be issued before a warranty gets included with the product.
Either way, the disclaimer serves to release the manufacturer or distributor of a product from legal liability for product failures or defects. Or it may release the maker of a warranty from the obligation to make repairs to a product or to replace it if it proves to be defective. Of course, the product must still comply with federal and state standards regarding safety and product liability.
However, excluding or disclaiming the implied warranty of merchantability requires more than just a simple contract provision saying that the manufacturer or distributor refutes the implied warranty of merchantability.
Another disclaimer of the implied warranty of merchantability that is not effective is a contract clause saying that the seller makes no warranties other than those included in the contract between the parties.
The manufacturer of a product may want to disclaim the implied warranty of merchantability or the implied warranty of fitness for purpose. They may want to substitute specific warranties or representations that they draft and that suit their commercial purposes. However, it is not effective to put a clause in a contract that says that the seller makes no warranties other than those in the contract. This does not negate the implied warranty of merchantability.
To disclaim the implied warranty of merchantability in a contract for the sale of goods, a written contract must state a disclaimer. It must do one of two things: either expressly address the warranty of merchantability and disclaim it or expressly state that the goods are sold “as is” or “with all faults.”
A disclaimer of the implied warranty of merchantability must be positioned in a place in the contract that is noticeable or conspicuous to the buyer. This means it should be in a position where a buyer is likely to see it and not buried among fine print that no reasonable buyer of a product is likely to read. Asking a buyer to initial a statement indicating their agreement with the disclaimer might be a useful step.
Warranties are also governed by state law, and if a disclaimer is an important issue in a transaction, the parties would want to know the law on the issue in the state in which they operate. In some states, for example, the law requires the sellers of property to disclose known defects when they sell it and warrant that it is in the condition represented.
A seller may try to disclaim this obligation by selling a property “as is.” But state law may disallow this effort to disclaim the duty to disclose and disclaim any warranties related to real property.
Can I Challenge a Warranty Disclaimer?
If a person buys a product and any warranty involved in the transaction is disclaimed, the buyer can certainly challenge the disclaimer if the product later turns out to be defective.
For example, a product may have noticeable defects at the time of the sale, and the buyer questions the seller and receives information from the seller about the defect that is false. In that case, the buyer may still sue the seller for fraudulent misrepresentation in spite of any warranty disclaimers. A successful claim of fraud committed by the seller in the course of the sales transaction may defeat a warranty disclaimer.
In addition, as noted above, successful disclaimer of the warranties of merchantability and fitness for purpose implied in all contracts may require special wording and other features as well under disclaimer laws. If these are not present, a person who has a defective product might be able to sue in spite of the warranty disclaimer.
Do I Need a Lawyer for Help With Warranties and Disclaimers?
If you have purchased a product for which warranties have been disclaimed, you want to consult a liability lawyer. LegalMatch.com can connect you to a lawyer who can advise you about drafting warranties that will hold up in court or drafting disclaimers if that is your need.
You may have a legal dispute involving a warranty, especially for large transactions or for items that have a high value. If this is the case, your attorney can provide you with legal advice and representation in the event that you need to file a lawsuit for your claim.
