Warranty and Guaranty Provisions in Contracts Part 2
In the second half of this article we will further explain the reasoning behind the confusion of warranty and guaranty provisions in construction contracts. These two terms are very similar and often indistinguishable for contractors. Without the correct understanding of warranty provisions versus guaranty provisions, contractors can unknowingly open themselves up to liability. To view the first half of this article, please visit Part 1.
What is the Confusion Surrounding These Terms?
As St. Petersburg construction attorneys, we know that warranty provisions and guaranty provisions often get intermingled, which can cause issues when drafting or enforcing a construction contract.
There are a few reasons for this. The term warranty may be used when it is really a guaranty. An example of this is would be a contract that states that the contractor warrants that the tiles he is using for a floor will be free from defects and that the contractor will replace any defective tiles within two years after that project is finished. The first part of this provision is warranty, however the second part leans more towards guaranty. When both of these provisions are combined into one statement, the contractor has left the time period wide open to either the two years or the statute of limitations period for a breach of contract. To remedy this, the contractor should make sure to isolate the first part of the sentence from the second part, and make it into two different provisions. For example, the contractor warrants that the tiles will be free from defects. If any tiles are found to be defective within two years after the project finishes, the contractor will replace them.
Using the Wrong Term
Another example of confusion when it comes to warranty and guaranty provisions, is contractors confusing the two terms and using the wrong one in their contracts. For example, a contractor uses the term guaranty instead of warranty, which can lead to the contractor guarantying that the work will be done without any defects, as wells as promising to stay in line with the provided design documents. The problem with this is that the contractor assumed the provision as a warranty.
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.