You probably hear the phrase “conditions and warranties” in relation to contracts all the time – but do you know what they really mean?
While people tend to use the terms interchangeably, they actually have distinctly different legal meanings and implications.
Conditions: These are the main pillars of your agreement
Conditions are the fundamental terms of the contract itself – they’re all the terms or requirements that have to be fulfilled for the contract to survive.
One side’s failure to meet a condition of the contract generally grants the aggrieved party the right to terminate the contract and/or seek remedies for any losses they’ve incurred as a result of the breach. In other words, failure to abide by a contract’s conditions can be fatal to the contract itself.
Warranties: These are assurances of quality and performance
Warranties are secondary promises within the contract regarding the quality or characteristics of services or goods being provided. They typically encourage trust between parties, but they are not at the heart of the contract itself. They can also be expressed (explicitly stated) or implied (arising as a matter of law due to the nature of the product or its marketing).
A breach of warranty typically entitles the aggrieved party to seek damages from the breaching party for any losses, but it doesn’t automatically discharge the contract.
Understanding the difference between conditions and warranties is crucial for effectively navigating all your contractual relationships. Whether drafting, interpreting or enforcing your business contracts, knowing the meaning of these terms can help you significantly mitigate your risks. That ultimately makes it easier to safeguard your rights and interests.
