Legal Definitions - warranty clause

A warranty clause is a specific section within a contract where one party makes a formal promise or guarantee to another party about a particular fact, condition, or aspect of the agreement. This clause establishes an assurance that certain conditions are true or that a product or service will meet a specified standard. If this promise or guarantee turns out to be false or unfulfilled, the party who made it may be held responsible for any resulting damages or issues.

In certain specialized contexts, such as real estate transactions or resource leases (like for oil and gas), a warranty clause can specifically involve a seller or lessor guaranteeing that they have clear, undisputed legal ownership of the property or rights being transferred, and they agree to defend that ownership if it's challenged by a third party.

• Example 1 (Consumer Product): Imagine you purchase a new smart refrigerator. The sales contract includes a warranty clause stating that the appliance is free from manufacturing defects for a period of two years from the date of purchase.

  Explanation: This clause is a direct promise from the manufacturer or seller that the refrigerator will function correctly and without defects for the specified period. If the refrigerator stops working due to a manufacturing flaw within those two years, this warranty clause obligates the seller to repair or replace it, demonstrating the contractual guarantee of product quality.

• Example 2 (Professional Services): A small business hires a web design agency to create a new e-commerce website. Their service agreement contains a warranty clause stating that the website will be fully functional and compatible with major web browsers for 90 days after its launch.

  Explanation: Here, the warranty clause is the web design agency's guarantee that their work product will perform as intended for a specific duration. If the website experiences significant bugs or compatibility issues within those 90 days due to the agency's development, this clause holds them accountable to fix those problems without additional charge, illustrating a contractual promise regarding service quality and functionality.

• Example 3 (Real Estate Transaction): When a developer buys a plot of land for a new housing project, the purchase agreement includes a warranty clause where the seller guarantees that they possess full, unencumbered legal title to the property and that there are no undisclosed easements or boundary disputes.

  Explanation: This warranty clause provides crucial assurance to the developer that they are acquiring clear and undisputed ownership of the land. If, after the sale, it is discovered that a previously unknown claim or legal issue existed against the property's title, the seller would be legally obligated under this clause to resolve the issue or compensate the developer, demonstrating their promise regarding the property's legal status.