Description of the legal term Warranty:
In British law, a warranty is a term of a contract which promises that certain facts or conditions are true or will happen. Unlike conditions, which are fundamental to the performance of the contract, warranties are terms which are not central to the existence of the contract, but rather ancillary to it. If a warranty is breached, the party suffering the breach is entitled to claim for damages, but the breach does not entitle the aggrieved party to repudiate the contract (i.e., to treat it as terminated).
The law differentiates between express warranties and implied warranties. An express warranty is one that is explicitly stated in the contract, either orally or in writing. For example, when purchasing goods, sellers often provide an express warranty that the goods are free from material defects for certain period after the sale.
Implied warranties, on the other hand, are those which the law presumes are part of the contract, even though they are not expressly stated. The Sale of Goods Act 1979 sets out various implied warranties that apply to the sale of goods, such as the warranty that the goods sold will be of satisfactory quality and fit for the purpose for which they are intended. In cases where the goods fail to meet these standards, it could give rise to a breach of warranty.
Further distinctions can be made between specific warranties, which pertain to certain facts about the product or service, and general warranties, which assure overall compliance with the contract terms or standards.
The breach of a warranty will entitle the innocent party to claim damages, but the measure of damages is generally the cost of remedying the breach, which might include repair or replacement costs or a compensation for reduction in the value of the goods or contract performance. However, if a breach of warranty results in additional indirect losses, it is unlikely that these will be recoverable unless such losses were contemplated by the parties at the time the contract was made.
In commercial contracts, particularly those dealing with international trade, the parties may include detailed warranty clauses covering various aspects of the goods or services. Businesses often negotiate such clauses intensely to ensure a clear understanding of what warranties are being made and the consequences of any breach.
Warranties are vital to protecting consumer rights and promoting fairness in commercial transactions. They serve to reassure buyers that they can expect a certain level of quality and remedy if that level is not provided.
Legal context in which the term Warranty may be used:
Consider a scenario where a consumer purchases a new smartphone with an express warranty that the device will be free from manufacturing defects for two years. Five months after the purchase, the smartphone’s screen malfunctions despite proper use. On taking the phone to the seller, it was concluded that there was indeed a manufacturing defect. In this case, the consumer would be entitled to a remedy under the warranty. The seller could offer to repair or replace the screen, or in some cases, replace the phone altogether. Because the warranty was part of the purchasing agreement, the consumer would not bear the cost of the repair if it was confirmed as a manufacturing fault covered under the warranty.
Now, if a commercial property lease includes a warranty that the premises are suitable for use as an office space, and later, it is discovered that the property does not meet the necessary regulations for this purpose, the lessee could claim a breach of warranty. The lessor, in this instance, may be required to make necessary adjustments to the property or compensate the lessee to cover the costs of making the premises suitable for the agreed-upon use.
Warranties play an essential role in maintaining trust in commercial transactions and protecting parties from unexpected defects or problems. They are an integral part of contract law in the UK, providing a framework for recourse when a product or service does not meet the agreed standards. This encourages meticulous attention to detail in contract formation and maintenance of high-quality standards in goods and services.