Warranties: Remedies
Commercial Contract
Table of Contents:
Non-Conforming or Defective Products
Malperformance of Services
Defective Title
Warranties: Remedies
As demonstrated in the following exemplars, parties to a contract may stipulate in advance what remedies are appropriate for certain warranty breaches, and whether such remedies are exclusive:
Non-Conforming or Defective Products
The following exemplars prescribe timely and cost-free repair and/or replacement as the stipulated remedy for a breach of warranty arising from product defects or other non-conformities:
Exemplar C79E-1
If during the Warranty Period, (1) a material defect or nonconformity occurs or appears in the Deliverables, or (2) any part of the Deliverables becomes materially defective or fails due to defects in workmanship, or due to Contractor's negligence, or (3) the Deliverables fail otherwise to materially meet the requirements of the Agreement, upon notification by Customer, Contractor shall promptly correct any such defects or nonconformities hereunder by repair, replacement or re-accomplishment as determined by Contractor with due regard for the integrity and scheduling of the project as a whole.
Exemplar C79E-2
In the event of a breach of the warranties in this Section or any additional warranty set forth in an applicable SOW, Vendor shall at Customer’s option (without charge or delay), repair, replace, re-perform or modify the affected Products so as to promptly correct such breach or default. Nothing in this Section shall be construed to limit any other rights or remedies available to Customer at law, in equity or otherwise.
Where return-and-repair/replacement is the remedy for a defective product, the parties may specify a test-and-return process to ensure efficiency, workability, and predictability:
Exemplar C79E-3
The sole and exclusive remedy of CUSTOMER and its End Users, and SUPPLIER’s sole and exclusive obligation, under the foregoing limited product warranty, is as follows:
a. Pre-Return Testing. Unless otherwise agreed to in writing by SUPPLIER, SUPPLIER shall only accept the return by CUSTOMER of Products that are defective and in-warranty, which Products shall be treated in accordance with this Section. Prior to returning any Product for repair or replacement or credit pursuant to this Section, CUSTOMER shall first confirm that the Product is under warranty and shall conduct pre-return testing to verify that the Product is defective. Each Product will be tested by CUSTOMER on SUPPLIER-supplied test benches with no-fault-found (NFF) units being refurbished by CUSTOMER as CUSTOMER inventory and defective units returned to SUPPLIER pursuant to this Section.
b. Returns. No Product shall be returned to or accepted by SUPPLIER unless and until CUSTOMER has notified SUPPLIER in writing of an alleged defect in the Product within five business (5) days of receipt of the Product from an End User, and SUPPLIER has been issued a return material authorization (“RMA”) number to CUSTOMER. CUSTOMER shall ship the Product in its original carton or packaging to a site designated by SUPPLIER, accompanied by the RMA number issued from CUSTOMER.
c. Risk and Expenses. CUSTOMER shall bear the risk of loss or damage during transit and shall prepay shipping costs for a Product returned to SUPPLIER. SUPPLIER shall bear the risk of loss or damage during transit and shall prepay shipping costs for a repaired or replacement Product returned to CUSTOMER. If a Product returned by CUSTOMER is defective and in-warranty, SUPPLIER will reimburse or credit the shipping costs prepaid by CUSTOMER for returning such Product. If a Product returned by CUSTOMER is not defective or out-of-warranty, SUPPLIER shall advise CUSTOMER in writing of this determination and shall return such Product to CUSTOMER at CUSTOMER’s expense (freight collect) and risk in its "as received" condition.
d. Exclusive Remedy. As the exclusive remedy of CUSTOMER and its End Users, and SUPPLIER’s sole obligation, relating to defective Products, SUPPLIER at its option shall: (i) repair a defective Product within thirty (30) days after confirmation of a defect and return the Product to the place designated by CUSTOMER, (ii) return a replacement for the Product to CUSTOMER to the place designated by CUSTOMER, or (iii) issue a credit to CUSTOMER equal to the actual purchase price of the returned Product.
Malperformance of Services
Where a service provider has malperformed or underperformed or otherwise fails to perform a contracted service, timely and cost-free re-performance of the service is the standard remedy:
Exemplar C79E-4
In the event of a breach of the foregoing warranties, without limiting Customer’s other rights and remedies, Seller will re-perform the defective Services at no charge to Customer within the time limits applicable to the Service under the applicable Statement of Work at the applicable service levels.
Defective Title
In the following exemplar, where a supplier breaches its warranty of good title (or non-infringement), the remedy is indemnification:
Exemplar C79E-5
Supplier warrants that it has all the rights, titles, and interests necessary to grant the rights and licenses to the Product, Modifications, and Deliverables as set forth herein to Company provided however that Company’s sole remedy and Supplier’s exclusive liability for breach of this warranty shall be to provide indemnification pursuant to Section X below.