Uniform Commercial Code Warranty of Fitness for Particular Purpose in Supply Agreements: Key Considerations for Suppliers and Buyers

Description

A product’s fitness for the particular purpose of its purchase is a critical component to the success of any supply agreement. The warranty supporting this understanding may be expressed or implied and flows from supplier to buyer. Suppliers often explicitly offer express warranties to the purchaser as part of the sale. Implied warranties, on the other hand, are imposed by law and follow the product regardless of the supplier’s intentions.

From the supplier’s perspective, warranting the fitness for a particular purpose involves considerable risk as it is based on the buyer’s intended use. This often leads suppliers to disclaim implied and express warranties altogether. In those instances when the Uniform Commercial Code imposes an implied warranty for fitness, it does so based on the premise that the supplier has reason to know how the buyer intends to use the product.

Counsel must consider warranties, expressed or implied, when drafting supply agreements. Concerning goods, suppliers and buyers alike must account for the product’s fitness for the particular purpose of its purchase and take steps to mitigate the inherent risks.

Listen as our panel of experienced attorneys offers guidance to counsel for suppliers and buyers on negotiating warranty provisions, considerations for each party regarding disclaimers, and how to effectively manage disputes that arise from breach of these provisions.