CON 216 - Contract Warranties

Question 1

What is a warranty?

Answer 1

A promise that a proposition of fact is true. Pledge,
assurance, guarantee, voucher, word, acknowledgment,
representation, commitment, obligation, certification,
insurance, endorsement, oath, bond, avowal, token,
affirmation

Question 2

What are the two types of warranties?

Answer 2

Express – written, stated in the contract.

Implied – not written or stated in the contract BUT
is available as a matter of law, i.e. UCC.

Question 3

What are the two types of implied warranties?

Answer 3

Warranty of Merchantability: (UCC §2-314)
Goods must be fit for the ordinary purpose for
which they are normally used.
Unless stated otherwise in the Merchants contract,
this warranty is incorporated as a matter of law
and commercial practice.

Warranty of Fitness for a Particular Purpose: (UCC §2-315)
Special protection for a buyer who relies on the seller’s
expertise in selecting suitable commercial goods.
Properly written performance statement in the SOW
helps to incorporate this implied warranty.

Question 4

Can the contractor or Government exclude/disclaim the warranty?

Answer 4

Implied Warranties Can Be Excluded.

May be specifically excluded by calling the buyer’s
or contractor’s attention, in understandable language,
to the exclusion of this warranty.
MUST BE WRITTEN.
MUST BE HIGHLY VISIBLE, IE “AS-IS.”
CANNOT BE JUST A GENERAL COMMENT.

Question 5

Do we always want the contractor to give us a written warranty?

Answer 5

Not always

Warranties Are Expensive.

Other than commercial, technical data, military
weapon systems or construction contracts, the
type and use of warranties is reserved to the HCA.

Warranties aren’t free. They cost. The HCA must
weigh the cost to benefit of the warranty.

Question 6

Who has the burden to prove a defect?

Answer 6

It is the Government’s Burden to Enforce Warranty by
doing the following:

• Prove the existence of the defect;
• Prove that the defect was within the scope of the warranty;
• Prove the defect arose during the warranted period;
• Prove that any damages caused are due to the defect.
• Make Timely notice was given of the defect

Question 7

What are the contractor’s defenses to a warranty claim?

Answer 7

Contractor’s Defenses to the Warranty:
Improper maintenance;
improper operation;
mishandling;
warranty provisions violated; and
alteration.

Question 8

What are the Government UCC remedies for a warranty breach?

Answer 8

Remedies for a breach of a UCC implied warranty:
In a nutshell, UCC §2-711 through §2-718, as well as
the Government’s “inspection clause for fixed-price
supply contracts” states that the buyer (Government),
in the event of a seller’s breach of an implied
warranty may do the following;
1cancel
2cover
3sue

Question 9

What does “cancel,” “cover” and “sue” mean?

Answer 9

Where the buyer properly rejects the goods or
revokes acceptance, he/she can cancel the contract,
cover the contract, that is go buy the goods or
services needed somewhere else and CHARGE
the contractor for the difference in price; and
sue for reasonable incidental damages and
consequential damages accruing to the breach