What Are Warranties and How Can Businesses Use Them?
Warranties are promises - plain and simple. But in business, they’re legally binding promises that one party makes to another, typically in a contract. When you buy goods or services, the warranty outlines what you're entitled to if something goes wrong. For businesses, understanding warranties isn't optional - it's essential.
What Is a Warranty?
In legal terms, a warranty is a contractual assurance that certain facts or conditions are true or will happen. In business, warranties most often show up in sales contracts, supplier agreements, service level agreements (SLAs), and software licensing deals.
There are two main types:
Express warranties are clearly stated - either in writing or verbally. For example, “This machine will perform at 95% efficiency for five years.”
Implied warranties are not explicitly stated but are assumed under law, like the warranty of merchantability (that a product will work as expected) or fitness for a particular purpose.
Why Warranties Matter
Warranties shift risk. If you’re buying equipment, software, or professional services, a warranty ensures that the product or service does what it’s supposed to. If it doesn't, the warranty gives you a legal avenue to demand a fix, replacement, refund, or even compensation.
In B2B transactions, warranties:
Provide quality assurance
Allocate liability between parties
Offer recourse when things go wrong
Reinforce accountability from suppliers or service providers
When Should a Business Use a Warranty?
Use warranties whenever you’re purchasing something that affects operations, revenue, compliance, or risk. Key scenarios include:
Buying machinery, tech, or infrastructure
Entering into software or SaaS agreements
Engaging consultants, contractors, or service providers
Mergers, acquisitions, or joint ventures (where warranties relate to financials, assets, IP, etc.)
The warranty should cover not just performance, but timelines, deliverables, uptime, maintenance, and regulatory compliance, depending on what’s at stake.
How to Enforce a Warranty
Review the contract. Confirm that the issue falls under the scope of the warranty.
Notify the other party. Do this in writing and as soon as possible.
Document everything. Track failures, downtime, or damages tied to the breach.
Follow dispute procedures. Contracts usually outline how to resolve warranty issues - whether through repair, replacement, refund, or legal action.
If the other party refuses to honour the warranty, your next step may involve legal counsel or commercial dispute resolution.
How Hemisphere Consultants Can Help
Warranties can be powerful but only if they’re drafted clearly, negotiated wisely, and enforced effectively. At Hemisphere Consultants, we help businesses structure warranties that actually protect their interests, not just decorate the contract.
Whether you’re on the buyer or seller side, we can help you:
Draft bulletproof warranty clauses
Evaluate risks and liabilities
Navigate breach of warranty claims
Resolve disputes quickly and efficiently
If you're entering into a high-stakes agreement, make sure your warranties work for you - not against you.