Warranty seems straight forward, but as contracting models have evolved times they are a changing the role of warranty has been impacted. From a classic contracting model the warranty, started upon acceptance, it generally states that the product will perform in accordance with documented specification (the technical definition of the product) for some limited period of time. Just how long the warranty lasted varied by the nature of the Product, in the Tech field hardware might be 90 days and software might typically be 1 year. The functional purpose of the warranty is to allow the buyer an extended period of time to work with the product in their environment and assure themselves that it “works as advertised”.

From the Seller’s perspective because it comes after acceptance they generally are permitted to recognize the revenue on that sale subject to a warranty reserve set aside, perhaps 2% of the revenue to cover the cost of providing the warranty service during the warranty period. The Buyer generally states that they will repair or replace the product to correct defects found and reported in the warranty claim, at the Seller’s sole cost and expense. One tricky aspect of the warranty is what if the product fails, a claim is made and the product is not cured during the warranty; well that might allow the Buyer to rescind his former acceptance of the Product (causing the Seller to need to reverse the previously reported sales revenue). It’s because of this unique right to “unwind” a final sale that you will see many remedies states that this is your exclusive remedy even if the remedy fails of its essential purpose (i.e. it does not cure the defect). So how has warranty changed, well warranty by definition is something less than maintenance and support, often the warranty is not done on-site, your must ship the product back to the vendor; in addition if you have a question about the product not working properly it’s up to you to sort that out and confirm the Product is not working properly (warranty is not support).

Some manufacturer’s offer customers a credit, perhaps 50% credit against a year 1 upgrade to full maintenance and support; other manufacturer’s offer Extended warranty where they build out the back of the warranty period to perhaps 3 years. The one big concern that I have seen creep into many warranties is they no longer clearly state they will repair the defect, rather they often look to a Service Level Agreement and tend to offer a credit. Of course that credit is not an adequate substitute for a properly functioning product.