Implied Warranties

A warranty is a guarantee or promise surrounding a commercial transaction. An express warranty is an explicit guarantee or promise openly and voluntarily offered by one party to the other to cover a specific transaction. An implied warranty is a guarantee or promise mandated by law, ordinarily running from a seller to a buyer, concerning the fitness or value (the “merchantability”) of the product or service being sold. Exactly what warranties are mandated, how long they run, whether and how a seller can disclaim any of them, and what remedies are available if any implied warranties are breached are all determined by the specific laws covering the transaction. In the United States, implied warranties are usually enacted and enforced under state law, while some transactions are covered by federal law, and a few transactions can be governed by both federal and state laws that are applicable.

Under the Anglo-American common-law system, a warranty comprises a promise between a seller and a buyer that a product or service will meet designated criteria of use or value; and if there is a failure to meet any criterion in whole or part, some remedy (such as compensation, repair, or replacement) will be forthcoming. A warranty is typically given by the seller to the buyer in explicit form such as a written document, detailing the specific promises associated with the particular sale. (In some transactions, buyers might also make certain promises that legally constitute a warranty that protects the seller: for example, that a license limitation for use of a patent will not be violated and the buyer will indemnify the seller if a breach results in legal action.) This express warranty is agreed between the parties—sellers and buyers—of the product or service at the time of sale and forms the foundation of the contractual agreement between them, along with the usual terms surrounding delivery and price.

Another form of warranty has become common—particularly though not exclusively in the United States, where the promises and criteria and remedies are determined by operation of law, not by agreement of the parties. In such cases, a legislature or court decides for the parties what promises a seller owes a buyer (or vice versa)—beyond any express promises about which the parties might negotiate and eventually agree. In some cases, these implied promises can lawfully be disclaimed by the seller (i.e., they will not come into existence if proper notice is tendered by the seller to the buyer before the transaction is settled). Still, in most consumer transactions, applicable statutory provisions and court decisions severely limit or deny altogether a seller the ability to disclaim any implied warranties that run in the consumer's favor.

Implied warranties may be best known from ordinary consumer transactions, both large and small in nature, but they also are mandated in many other commercial transactions. For example, under Article 2 of the Uniform Commercial Code (UCC)—a code that has been adopted in some form by every state in the United States—there is an implied warranty of merchantability, whereby goods are held to six established criteria that circumscribe the quality, quantity, fitness for use, and even packaging of the goods.

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