Q: What’s the difference between an express warranty and an implied warranty?

Express warranties are specific promises made by the seller, either in writing or verbally. They directly state what the seller guarantees about the product or service. Implied warranties are automatically created by law, regardless of whether they’re written in the contract. The two most common are: Implied warranty of merchantability: The product is fit for its ordinary purpose Implied warranty of fitness for a particular purpose: The product is suitable for a specific use the seller knows the buyer requires Most commercial contracts include provisions to disclaim implied warranties, relying solely on express warranties instead.

Question 1

What’s the difference between an express warranty and an implied warranty?

Accepted Answer

Express warranties are specific promises made by the seller, either in writing or verbally. They directly state what the seller guarantees about the product or service.

Implied warranties are automatically created by law, regardless of whether they’re written in the contract. The two most common are:

Implied warranty of merchantability: The product is fit for its ordinary purpose
Implied warranty of fitness for a particular purpose: The product is suitable for a specific use the seller knows the buyer requires

Most commercial contracts include provisions to disclaim implied warranties, relying solely on express warranties instead.

Question 2

Can warranty clauses completely exclude consequential damages?

Accepted Answer

In most commercial contexts, yes, but with important limitations. Courts generally enforce consequential damage exclusions between businesses but may invalidate them if:

Fraud or intentional misconduct is involved
The exclusion violates public policy
The limitation leaves the buyer without any meaningful remedy
Consumer protection laws apply (which often restrict such limitations)

Always consider jurisdiction-specific rules when drafting these limitations.

Question 3

How should warranties address third-party components or open-source elements?

Accepted Answer

Best practices include:

Clearly identifying which components are third-party or open-source
Passing through manufacturer warranties for major components
Specifying who bears responsibility for third-party component failures
Addressing open-source license compliance explicitly
Considering indemnification for intellectual property claims related to third-party components

Question 4

Are warranty disclaimers in ALL CAPS really necessary?

Accepted Answer

In many U.S. jurisdictions, yes. The Uniform Commercial Code requires disclaimers of implied warranties to be “conspicuous,” which courts often interpret as requiring capitalization. Other formatting like bold text or larger font size may also satisfy this requirement, but ALL CAPS remains the safest approach in U.S. contracts.

Other jurisdictions have different requirements, so consult local regulations.

Question 5

How can we avoid creating accidental warranties during sales and marketing?

Accepted Answer

Train your teams to:

Distinguish between product descriptions (which may create warranties) and expressions of opinion
Document performance claims with testing data
Include disclaimer language in marketing materials
Ensure contracts include integration clauses that prevent marketing materials from being considered part of the agreement
Review marketing materials through legal or compliance channels

topics

Resources

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