Warranty
A warranty clause sets out the promises each party makes about the goods or services supplied, and about itself, which give the other party a claim if untrue.
What it does
A warranty is a contractual promise that something is, or will be, true. In B2B contracts, warranties fall into two groups. General warranties are given by both sides: each party has the authority to enter the contract, and doing so does not breach any other agreement. Performance warranties are given by the supplier: reasonable skill and care, material conformity to documentation, goods free from defects for a period.
If a warranty is breached, the remedy is normally damages, subject to the liability cap. Many contracts add a specific remedy for performance warranties: the supplier must re-perform the service or fix the defect within a set time, and if it cannot, refund the relevant fees. That is often stated as the customer’s sole remedy for the breach.
Most warranty clauses also contain a disclaimer: apart from the warranties stated, all others, including those implied by law, are excluded to the extent permitted. How far that works is heavily jurisdiction-dependent.
Example wording
The Supplier warrants that the Services will be performed with reasonable skill and care and in accordance with the Documentation in all material respects. If the Services fail to comply with this warranty, the Supplier shall, at its option, re-perform the non-conforming Services or refund the fees paid for them, and this shall be the Customer’s sole remedy for breach of this warranty. Except as expressly stated in this Agreement, all warranties, conditions, and terms implied by law are excluded to the fullest extent permitted.
Risks for SMBs
The warranty says less than the sales pitch. A vendor’s proposal promised 99.9% uptime and a specific feature set. The contract warrants only that the service “materially conforms to the documentation,” and the documentation is vague. Warranties are enforceable. Slides are not. Get the promises that matter into the contract, either as warranties or as service levels.
“Sole remedy” language. If re-performance or refund is the sole remedy, the customer cannot claim damages for losses caused by the defect, even if those losses far exceed the fees. This is standard in software contracts but worth understanding before signing.
Short warranty periods. A 30-day warranty period for a system implementation means defects discovered in month two are not covered. Match the period to how long it realistically takes to find problems.
Warranties given by SMB suppliers that are too broad. Warranting that software is “error-free” or “will meet the Customer’s requirements” is a promise no supplier can keep. Warrant material conformity to defined documentation instead.
Implied terms cannot always be excluded. In some jurisdictions, statutory implied terms about quality and fitness for purpose apply to business contracts and can only be excluded where reasonable, or not at all. A disclaimer that goes too far may fail entirely.
Common variants and negotiation points
- Warranty period. 90 days from delivery or acceptance is a common middle ground for implementations. For ongoing SaaS, the warranty typically applies throughout the term.
- Remedies escalation. Re-performance first, then refund, then termination for cause if the defect persists beyond a set period.
- Specific warranties. Add warranties on the points that matter: no malicious code, compliance with named laws or standards, suitably qualified staff.
- Interaction with the cap. Clarify that warranty claims fall within the liability cap, and that the “sole remedy” wording does not remove termination rights or indemnities.
Related clauses
- Liability cap: limits what a warranty breach is worth.
- Service levels: measurable performance promises with defined remedies.
- Indemnification: covers overlapping risks, such as IP infringement, through a different mechanism.
- Termination for cause: the exit if a warranty breach is serious enough.
This page is general information about a common contract clause. It is not legal advice and does not account for your jurisdiction, industry, or the specific contract in front of you. Talk to a qualified lawyer before relying on it.
Tracking renewal dates, notice periods, and other contract obligations is what Trackado does.