Don’t Get Screwed by the Warranty

Those silly warranty provisions. You see them all the time in contracts where a seller of goods or services has language, usually in ALL CAPS AND BOLD, that essentially says “yea, I sold this this stuff, but I’m not promising that it really does what it’s supposed to do or what you want it to do.” These Disclaimers of Warranties Of Merchantability or Fitness for a Particular Purpose, should not be taken lightly, and should be carefully scrutinized by your lawyer.

The Implied Warranty of Merchantability is the most basic warranty stating that the product meets industry standards and is fit for its intended use (which is distinguishable from a buyer’s specific use of the product). The product might have reasonable uneven quality and quantity but it is not excessive, and the product is truthfully labelled. The most important elements of this definition are understanding what is normal in the industry.

Many of my clients are buying off-the-shelf software or having software developed, to accomplish specific goals. The documentation and contracts provided by the developer often state they disclaim an implied Warranty of Fitness for a Particular Purpose.

The Warranty of Fitness for a Particular Purpose is more specific than the Warranty of Merchantability. The Warranty of Fitness for a Particular Purpose arises where the seller knew or should have known what the buyer was going to use the product for and the seller is promising that it will perform that function. In Michigan, a buyer will automatically be granted an implied warranty of fitness if the seller is aware of the buyer’s intended to use and was relying on the seller to select or provide the right goods. To support a claim, the buyer should include detailed specifications of who will use the product, what the product should accomplish, when or under what circumstances the product will be used, and why the product is needed (Who, What, When, and Why – The 4-Ws).

While Michigan law automatically grants this warranty to a buyer if the seller had reason to know why the buyer needed the software and the buyer relied on the software developer’s knowledge in providing the goods, you should not rely on the law. Make sure this clause is deleted and make sure the 4-Ws are added to the purchase order or contract. .  Finally, email communications of these elements that are ultimately not part of the contract could be fatal to a buyer’s claim.

In summary: Don’t rely on the law to grant you rights in the product you buy. Contracts for special order products should explicitly cover the 4-Ws.

Questions about warranties or what you should sign?  Call me 248-455-6500 or email me agoldberg@confidenceandclarity.com, and we can talk.

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