Warranties: What purchasing pros need to know about them: Part I
Robert Menard, Certified Purchasing Professional, Certified Professional Purchasing Consultant
Editor’s note: This is Part I of a two part story on warranties. Part I sets forth the frame work and definitions while Part II cites examples.
A warranty is essentially a guarantee of certain promises in the purchase and sales agreement. Warranties can relate to a product’s ability to perform as agreed or of the maker’s responsibility for repair or replacement of defects, or even ownership and patent protections. In some cases, warranties provide remedies for failure to comply with contractual provisions whether stated or provided by applicable law.
Beyond these broad definitions, what do professional buyers need to know about warranties? Above all, buyers must seek a lawyer’s advice. This blog entry is
intended only to stimulate awareness amongst purchasing pros of warranties, whether statutorily afforded or negotiated. For the purposes of this discussion, we will limit ourselves to commercial transactions within the US.
The Uniform Commercial Code (UCC)
The UCC affords warranty protections for the purchase of goods, not services. The UCC is not a federal law but has been adopted virtually in tact by 49 states – Louisiana being the exception. Some warranty protections are included whether or not stated in the PO. The chart below sets forth the basic warranties of the UCC. There are curious exceptions such as minerals that are severed from the land by buyer or seller so seek competent legal counsel in such matters.
| Warranty | Why Important | Comments |
| Implied Warranty of Merchantability | Assures buyers that goods are fit for their ordinary purpose. | Limits protection on used goods, which buyer should inspect. Sellers may try to disclaim or limit warranty. |
| Implied Warranty of fitness for a particular purpose | Assures buyers that a stated specific purpose is warranted by seller. | Technical specifications of buyer and/or brand names may void warranty protection. Generally, buyer may specify the result, not the methods. |
| Expressed Warranty | Buyer and seller can negotiate any terms, provided that they are factual and quantifiable. | Cannot be tied to salesman’s “puffery”. Also, remedy must relate to the factual, identifiable criteria. |
| TitleOwnership rights | Assures the buyer that seller can lawfully convey goods to buyer free from claims of ownership by others | UCC listings or liens (UCC-1 and UCC-4, etc) override this protection. Buyers must verify that no liens are recorded (lien search) that would affect ownership. |
| Patent Infringement By Seller | Protects buyers against third party suits – presuming that seller has sufficient assets to indemnify buyer. | Buyer must promptly notify seller of third party suit as a condition of preserving warranty protection |
| Patent Infringement By Buyer | Protects seller against third party suits when buyer specifies design, manufacture process, etc. | Overseas suppliers may be free of US patent laws and duplicate patented products with impunity. Buyer however, may still be liable. |
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