In product liability insurance, what is "Breach of Warranty"?
One of the oldest and widely recognized theory is breach of warranty for which there are two types of claims. One is expressed, the other implied. An expressed warranty makes certain performance claims often found in a number of different sources— your sales and promotional materials, a sales contract, other published data, even in oral representations. At one time, an expressed warranty extended protection only to the original purchaser of your product. Other innocent victims that might have been injured or suffered property damage could not normally recover under this theory. However, today, the final customer may also bring action against you, claiming that they relied upon your representations and performance claims when making their decision to purchase your product.
Avoid the temptation to overstate or exaggerate the characteristics of your product. It is understandable that you are proud of your efforts and wish to tell your customers just how good it really is. But unfounded or as yet unproven claims of this sort can be very costly to your organization. Then, too, there are claims of implied warranty which differ from an expressed warranty. If you market your product to be both “fit for a particular purpose” as well as “merchantable,” you may have “implied” that a warranty exists between both parties. In many jurisdictions, an actual contractual type relationship may be identified between you and your customer.
This information is intended only as a reminder and is offered solely as a guide to assist management in its responsibility of providing a safer working environment. This bulletin is not intended to cover all possible hazardous conditions or unsafe acts that may exist. Other unsafe acts or hazardous conditions should also be noted and corrective action taken. Contact your legal counsel for additional information on these and other liability issues facing your business.
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