Last edited 12 Jan 2018

Warranty

The term 'warranty' can have a number of meanings, but in general, it refers to a legally binding assurance or promise.

Warranties may be used to provide assurance from one party to another that goods and/or services will meet certain expectations, e.g. fit for purpose, being free from defects, complying with statutory and other regulations and specifications.

A warranty can be either express (i.e. written) or implied.

A common form of warranty, and one that is paid for, is that which runs with a product, meaning that the customer of a product is given an assurance by the manufacturer that any defects or losses will be repaired or compensated during a given period. The warranty can also detail both parties’ rights and obligations in the event of a dispute.

Defects in buildings are not recoverable in tort (only as a contractual claim), as they are economic loss which are only recoverable through a contractual relationship. As a result, collateral warranties have been developed. These provide for a duty of care to be extended by one of the contracting parties to a third party who is not party to the original contract.

A typical example is an architect of a new development agreeing to a duty of care to the occupant. Privity of contract rules would prevent any liability arising between the architect and occupier without the existence of a collateral warranty.

For more information see: Collateral warranties.

Bonds and guarantees are forms of security that accompany contractual obligations and are based on either primary or secondary obligations.

For more information see: Guarantees.

Other forms of assurance that might be referred to on construction projects include:

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