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What are the best ways to ensure that warranties in a sales contract are clear and enforceable?

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Warranties are promises made by a seller to a buyer about the quality, performance, or functionality of a product or service. They are often included in sales contracts to provide assurance, protection, and remedies for both parties. However, warranties can also be a source of disputes, confusion, and litigation if they are not clear and enforceable. In this article, you will learn some best practices for drafting and managing warranties in a sales contract.

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Jaybee G.

Revenue Operations Specialist | Breadcrumbs
Manish Jayantilal Kothawala PMP,BE,DFM

Vice President-MEP at LODHA Group Regional MEP Head
Isu K.

Contracts Management| Procurement | Capital Project | Energy and Environmental Law Professional| Infrastructure| Risk…

1 Define the scope and duration

The first step to ensure that warranties are clear and enforceable is to define the scope and duration of the warranties. The scope refers to what aspects of the product or service are covered by the warranty, such as its features, specifications, standards, or compatibility. The duration refers to how long the warranty lasts, such as a specific period of time, a number of uses, or a milestone. You should avoid vague or ambiguous terms, such as "reasonable", "satisfactory", or "as long as necessary". Instead, you should use precise and measurable terms, such as "one year from the date of delivery", "10,000 hours of operation", or "until the completion of the project".

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2 Specify the remedies and limitations

The second step to ensure that warranties are clear and enforceable is to specify the remedies and limitations of the warranties. The remedies refer to what actions the seller will take if the product or service fails to meet the warranty, such as repair, replacement, refund, or compensation. The limitations refer to what conditions or exceptions apply to the warranty, such as exclusions, disclaimers, or caps. You should clearly state the remedies and limitations in the sales contract, and make sure they are consistent with the applicable laws and regulations. You should also avoid unfair or unreasonable remedies or limitations that may undermine the value or purpose of the warranty.

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3 Communicate the terms and expectations

The third step to ensure that warranties are clear and enforceable is to communicate the terms and expectations of the warranties to the buyer. You should provide the buyer with a written copy of the sales contract, including the warranties, before or at the time of the sale. You should also explain the warranties in a clear and simple language, and highlight any important or unusual clauses. You should also inform the buyer of any actions or obligations they need to perform or comply with to activate or maintain the warranty, such as registration, installation, maintenance, or notification.

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4 Monitor the performance and feedback

The fourth step to ensure that warranties are clear and enforceable is to monitor the performance and feedback of the product or service. You should keep track of the quality, functionality, and reliability of the product or service, and identify any defects, malfunctions, or complaints. You should also solicit feedback from the buyer on their satisfaction, expectations, and needs. You should use this information to improve your product or service, and to address any issues or concerns related to the warranty. You should also document and record any warranty claims, disputes, or resolutions, and follow up with the buyer accordingly.

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Jaybee G.

Revenue Operations Specialist | Breadcrumbs
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When you sell, you make a commitment to the functionality and durability of your product. This promise serves as your warranty and a safeguard for the customer against any problems that may arise after the sale. Evaluate the effectiveness of your offering and the level of customer satisfaction. The input from customers becomes an important resource for enhancement. Utilize it to gain knowledge and upgrade your goods, service, or even the warranty itself if needed. A tool that facilitates the retrieval and utilization of data and information is necessary in order to verify the warranty on your product or service. Revnue is a platform that can analyze your warranties and contracts and provide you with dashboards and reports.

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5 Review and update the warranties

The fifth step to ensure that warranties are clear and enforceable is to review and update the warranties periodically. You should evaluate the effectiveness, relevance, and compliance of the warranties, and compare them with the industry standards, best practices, and customer preferences. You should also consider any changes or developments in the market, technology, or legislation that may affect the warranties. You should then update the warranties accordingly, and communicate the changes to the buyer. You should also obtain the buyer's consent or acknowledgement for any material or substantial changes to the warranties.

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Isu K.

Contracts Management| Procurement | Capital Project | Energy and Environmental Law Professional| Infrastructure| Risk and Compliance Expert
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In the process of reviewing the provisions of the contract, ensure that includes any necessary disclaimers to limit the scope of the warranty. For example, if certain conditions must be met for the warranty to be valid, clearly state those conditions. If there are any exclusions or limitations to the warranty, it should be explicitly listed. Clearly state what circumstances or damages are not covered. This helps manage expectations and avoids misunderstandings.

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6 Seek professional advice

The sixth and final step to ensure that warranties are clear and enforceable is to seek professional advice. You should consult a lawyer, a contract manager, or an expert in your field to help you draft, review, and manage the warranties in your sales contract. They can provide you with legal guidance, industry insights, and best practices to ensure that your warranties are clear, enforceable, and beneficial for both parties. They can also help you resolve any disputes or conflicts that may arise from the warranties, and protect your rights and interests.

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7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Manish Jayantilal Kothawala PMP,BE,DFM

Vice President-MEP at LODHA Group Regional MEP Head
举报内容
Initial step to ensure that warranties are clear and enforceable is to?define the scope and duration of the warranties. This scope refers to what aspects of the product or service are covered by the warranty, such as its features, specifications, standards, compatibility etc

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What are the best ways to ensure that warranties in a sales contract are clear and enforceable?

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1 Define the scope and duration

2 Specify the remedies and limitations

3 Communicate the terms and expectations

4 Monitor the performance and feedback

5 Review and update the warranties

6 Seek professional advice

7 Here’s what else to consider

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