Most business people understand a warranty to be a written undertaking, either in a contract or provided with a product, that says what the manufacturer or seller will do if there is a problem with a product. It is true that such documents are warranties. However, the law goes further. Statements your sales people make in the sales process may also create warranties.

Lawyers love sales people because comments made during the sales process have helped them win cases time and time again. Here is how the problem can arise: Sales people are typically trained to think of themselves as consultants. Sales people may make recommendations; they may make very specific statements regarding the capabilities of the product; they may even prepare customized Return on Investment (ROI) reports or other written reports regarding the benefits of the product for the customer. Although this approach is undoubtedly effective in creating sales, it can result in unintended express warranties.

Under the Uniform Commercial Code (“UCC”), any affirmation of fact regarding the goods that becomes part of the basis for the bargain can create an express warranty. Descriptions and samples of the product that become part of the basis for the bargain can also create express warranties.  There is probably no way to avoid this risk completely. However, there are some common sense steps that can be taken to lower the risk without lowering sales.

First, if a sales person is creating an ROI analysis or similar document, any statements regarding performance should be described as an “estimate” or “illustrative,” and that actual experience may vary. Of course, it is also very important to have data and experience backing up any estimates!  Secondly, every effort should be make to have the customer sign off on a written contract or terms and conditions that state that the only warranty is the written warranty stated in the contract or the terms, and that the contract or terms supersede all prior discussions, negotiations, and agreements. 

It is best to have an experienced lawyer review your sales techniques and prepare a standard contract or terms and conditions to avoid any problems down the road with creation of unintended warranties.