Warranty and Guaranty Provisions in Contracts Part 1
In construction contracts, it tends to be hard to differentiate between warranty and guaranty provisions. As Bradenton construction attorneys, we will take the time in this article to address the confusion between these two provisions, and discuss the important variations between these two notions. To view the second half of this article, please visit Part 2.
With a warranty provision, the contractor “warrants” (or represents) that their work will be conducted in accordance with the set standards that were issued in the contract, and otherwise be free of construction defects and stay in line with the design documents. As Bradenton construction lawyers, we know how important it is for contractors to understand warranty provisions, and how to avoid violating them. If a contractor breaches a warranty clause, they will be found liable. If there is a breach of the warranty, the solution is to recover any financial damages that were sustained by the other party (i.e., the project owner or general contractor).
An example of this would be defected materials that need to be replaced by the owner. If there was a breach of warranty, the owner is eligible to receive the cost of repairs or a replacement from the owner.
In a construction contract, a guaranty (or guarantee) provision goes into effect after the contractor finishes the work, and needs to replace defective materials or equipment, or needs to fix improper workmanship, both of which is done at their own expense. With guaranty provisions, the contract that contains this requirement typically comes with an expiration period informing when the guaranty is no longer enforceable.
In construction, the term “guaranty” is not used to distinguish this requirement, and the term that is used instead is “warranty” which often leads to the confusion of these two terms. In the second installment of this article we will discuss the confusion surrounding these two terms, and how contractors can remember their differences.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.