Guarantees and warranties

Guarantees and warranties are contractual provisions. ws are used as a means of distributing financial risks among the parties to a contract. A guarantee may be based on the existence of a particular fact, circumstance or event (such as the right to build on the parcel of land that is the subject of the sale, or the amount of turnover earned in the past) or the non-existence of a given fact, circumstance or event (such as the absence of asbestos in the house that is the subject of the sale). Guarantees generally form the heart of a contract of sale.

A warranty (or indemnity clause, as it is also known) is a clause in which one of the parties to a contract offers to compensate the other party for any loss or damage it may incur. A warranty is often linked to a guarantee: if the guarantee terms are breached, the guarantor is then bound to pay either full or partial compensation to the other party.

Negotiating, drafting and invoking guarantees and warranties is a highly specialised business, demanding expert advice that we will be only too pleased to provide.

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