Legal Definitions - continuing warranty

A continuing warranty is a promise or guarantee made by one party in a contract to another, asserting that a particular fact, condition, or state of affairs will remain true or be maintained not just at the time the contract is formed, but throughout the entire duration of the agreement or for a specified period. If the warranted condition ceases to be true or is not maintained during that time, the party who made the promise may be considered in breach of contract.

Here are some examples to illustrate this concept:

• Example 1: Business Service Contract

  A marketing agency hires a freelance graphic designer for a long-term project. The contract includes a continuing warranty that the designer will maintain all necessary software licenses and professional liability insurance throughout the entire engagement. This means the designer isn't just promising they have these at the start, but that they will *continue* to possess them for as long as they are working on the project. If the designer's software license expires mid-project, or their insurance lapses, they would be in breach of this continuing warranty.

• Example 2: Commercial Loan Agreement

  A manufacturing company secures a bank loan to expand its operations. The loan agreement contains a continuing warranty stating that the company will maintain a specific debt-to-equity ratio and will not take on additional significant debt without the bank's approval for the entire term of the loan. This is a continuing warranty because the company must uphold these financial conditions not just when the loan is issued, but for every year until the loan is fully repaid. A failure to maintain the specified ratio or taking on new debt without approval would constitute a breach.

• Example 3: Real Estate Lease

  A tenant leases a commercial property for five years. The lease agreement includes a continuing warranty that the tenant will comply with all environmental regulations and local building codes related to their operations on the property throughout the lease term. This warranty ensures that the tenant's activities remain lawful and environmentally sound for the entire five-year period, not just at the time they move in. If the tenant's operations later violate a new environmental regulation or an existing building code, they would be in breach of this continuing warranty.