Warranty

In commercial transactions the term ‘warranty’ refers to an assurance given by one party to another that specific promises will be honoured. The other party has access to remedies if the promise is not honoured. In many international jurisdictions there are implied warranties when selling goods. Examples include a warranty of merchantability, i.e. that the goods are consistent with what ‘passes ordinarily in the trade’ and a warranty of fitness for purpose, which implies that if the seller knows the purpose for which the buyer is acquiring the goods, then the seller will guarantee that the goods are fit for that particular purchase. When developing terms and conditions, the terms of the contract can either be a ‘condition’ or a ‘warranty’. While a condition goes to the root of a contract and a breach would give the other party a right to termination as well as damages, breach of a warranty would only give the other party a right to damages. The distinction as to whether a term is a condition or a warranty depends upon the subject matter of the agreement and does not depend upon how the agreement is drafted. See also Contractual Term.