Goods arrive damaged, or fail after three weeks, or turn out not to match the specification. What you can do about it depends on two things: the promises the supplier made in the contract, and the terms the law implies whether the contract mentions them or not. The warranty clause is where the two meet, and it is often drafted to give you less than the law otherwise would.
What is a warranty?
In everyday contract language, a warranty is a promise about the goods or services: that they will meet the specification, be free from defects or perform in a particular way for a set period. If the promise turns out to be untrue, the supplier is in breach and you have a claim.
Lawyers also use “warranty” in a narrower sense, meaning a less important term whose breach gives you damages but not the right to reject the goods or terminate. The more important terms are called conditions. The label a contract uses isn't always decisive, but it is worth noticing when a supplier describes all of its promises as warranties.
The terms implied by law in business contracts
Where one business sells goods to another, the Sale of Goods Act 1979 implies terms that the goods will correspond with their description, be of satisfactory quality and, where you have made known the particular purpose you need them for, be reasonably fit for that purpose. It also implies that the seller has the right to sell them. These implied terms are conditions, not warranties in the narrow sense.
Satisfactory quality means the standard a reasonable person would regard as satisfactory, taking into account the description, the price and any other relevant circumstances. It covers things like freedom from minor defects, safety and durability. It doesn't cover defects the supplier specifically drew to your attention before the contract, or defects that an examination you actually carried out should have revealed.
Fitness for purpose applies where you told the supplier, expressly or by implication, what you needed the goods for. If you buy pumps and explain they'll be used with a particular chemical, they need to cope with it, unless you didn't rely on the supplier's skill and judgement or it would have been unreasonable to do so. Put the intended use in writing, ideally in the specification.
Where the contract is for services, or for work and materials together, the Supply of Goods and Services Act 1982 implies similar terms about any goods supplied, and a term that the service will be carried out with reasonable care and skill. If you're buying as a consumer rather than a business, these rules are replaced by the Consumer Rights Act 2015, which gives stronger rights that can't be excluded.
How suppliers cut down the implied terms
In a business contract, the implied terms about description, quality and fitness for purpose can be excluded or restricted, but only so far as that satisfies the reasonableness test in the Unfair Contract Terms Act 1977. The implied term that the seller has the right to sell the goods can't be excluded.
The usual technique is to give an express warranty, for example that the goods will be free from defects in materials and workmanship for 12 months, and then say it is given “in place of all warranties, conditions and other terms implied by statute or common law”. There is often a further clause saying the supplier's only obligation is to repair or replace the goods or refund the price. Read together, those clauses can swap your implied rights for something narrower and shorter, and take away any claim for losses beyond the value of the goods.
Whether that is enforceable depends on the reasonableness test, which turns on the circumstances, including bargaining strength and whether you could have bought elsewhere on better terms. Don't assume a court will strike it down. If the express warranty is going to be your main protection, it needs to be a good one.
What a good express warranty covers
What is warranted. “Free from defects in materials and workmanship” is much narrower than “will conform to the specification and be fit for the purpose set out in the order”. If the goods are meant to achieve a particular output or level of performance, that should be warranted too.
How long it lasts and when it starts. A period running from delivery can be partly used up before the goods are installed or put to use, so if there will be a gap, ask for it to run from installation or acceptance. What is a fair length depends on the goods. Twelve months is common, but for equipment you expect to rely on for years it may be worth asking for longer.
What you have to do to claim. Many clauses require notice of a defect within a short period after delivery or discovery, and say the claim is lost if notice is late. Make sure the period is realistic for how the goods will be used, and that the people who will spot a defect know it exists.
The remedy. Repair or replacement is a normal first step, but you want a fallback if the fix fails or takes too long, such as a refund, the right to reject, or the right to recover the cost of having the problem put right by someone else.
Warranty exclusions to watch
Most warranties exclude fair wear and tear, damage caused by misuse or by failing to follow the supplier's instructions, and unauthorised modifications. Those are generally reasonable. The ones to question are exclusions wide enough to swallow the warranty, such as excluding any defect the supplier attributes to “operating conditions” without saying what conditions the goods are designed for, voiding the warranty if anyone other than the supplier carries out routine maintenance, or excluding defects in components the supplier bought in from third parties, which may be most of the product.
Warranty periods and time limits for claims
A warranty period isn't the same thing as the time limit for bringing a claim. Under the Limitation Act 1980, a claim for breach of an ordinary contract must generally be brought within six years of the breach, which for defective goods is usually the date of delivery. Some supply terms shorten that considerably by saying no claim can be brought unless it is notified within, say, 12 months. In standard terms that kind of clause is subject to the reasonableness test, but it is often upheld, so diarise it.
How to make a warranty claim
Keep evidence as soon as a problem appears: photographs, test results, batch or serial numbers, and a note of who found the defect and when. Notify the supplier in writing within the time the contract allows, and follow any notice clause to the letter, including the address, the method of delivery and the person it must go to. Say what is wrong and what you want done.
If the supplier doesn't put things right within a reasonable time, set a deadline in writing and reserve your rights to other remedies. If it escalates, check whether the contract has a dispute resolution procedure you have to follow before issuing proceedings.
Before you sign
Read the warranty, the exclusion of implied terms and the limitation of liability clause together, because they work as a package and a generous-looking warranty can be undone by the other two. If you want a check of how they fit together in your agreement, you can upload it to QuickLegalCheck for a review.
Related: what the supply agreement review covers, and a complete sample report.