Breach of Warranty Vs. Breach of Contract

If you sign a contract to buy something and it turns out be defective, you may be able to sue for breach of contract, breach of warranty or both. Although the two sound similar, there are legal differences in the meaning, the remedies and the statute of limitations involved if you take legal action against your supplier.

Breach of Contract

When two parties make a contract, each party is obligated to carry out her part of the deal; if one party fails to meet her obligations, she's in breach of contract. A breach can be either material or immaterial. An immaterial breach is one that a court decides doesn't have any real effect on the terms, such as a scratch on the side of a new television that doesn't damage it. Delivering a TV that doesn't work, on the other hand, would be a material breach.

Breach of Warranty

Usually, anything you buy comes with an implied warranty that it's good for normal uses, Wake Forest Professor Timothy Davis states in an online article: If you buy a watch, for instance, there's an implied warranty it tells time accurately. Sellers may also make explicit warranties about what the product will do, or how long it will last. Breaches happen if a product fails to meet the standards in either the explicit or the implied warranty.

Remedies

If you sue for breach of contract, you can try to force the other party to honor their end of the deal -- replacing a defective item, for instance -- or you can demand they compensate you for any financial losses. In a breach of warranty case, the Uniform Commercial Code states, your damages are primarily the difference in value between the item you thought you were buying and what you actually received.

Significance

The difference between a warranty breach and a contract breach can be important if you're taking legal action; the statute of limitations in the Uniform Commercial Code sets different time limits for how long you can wait to sue. Many courts, Davis says, have also ruled that you have to accept a product in order to claim breach of warranty; if you refuse it, your only option is breach of contract.

References

Resources

About the Author

A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.