Checklist of questions that should be asked
when negotiating a warranty section on
1. Does the warranty clearly state the standard to which
the vendor is subject (e.g., “free from material defects”;
“performs substantially in accordance with end user docu-
mentation” for software)?
2. Does the warranty specify the time period within which
the customer must notify the vendor of any warranty
3. Does the warranty include appropriate exclusions (e.g.,
exclusions for software errors which cannot be reproduced,
which occur in an unsupported hardware and system
software environment, or which has beenmodified by the
customer or any third party)?
4. Does the warranty include appropriate conditions prec-
edent to the vendor’s obligation to provide a remedy for
failure of performance (e.g., a requirement that the vendor
be able to reproduce the error or demonstrate the occur-
rence or a statement of the costs the customer will be
required to bear for fixing the issue)?
5. Does the warranty include sole and exclusive remedies for
breach of warranty (e.g., such as “the exclusive remedy for
breach of warranty is to fix or repair the software”)?
6. Does the warranty include an alternate exclusive remedy
in the event the first remedy fails of its essential purpose
(e.g., “refund of the purchase price”)?
7. Typically in a limited warranty section, does the Agree-
ment contain a conspicuous disclaimer of the implied
warranty of merchantability and does it also disclaim the
implied warranty of fitness for a particular purpose, the
warranty of title, or a warranty of non-infringement?
8. Is there awarranty that the licensor has taken the necessary
precautions to excluded viruses?
9. Are the limitations of liability set forth in a separate section
of the agreement from the warranty?
10. Does the agreement contain an acknowledgment by the
customer that the purchase price or license fee reflects the
negotiated warranty provisions?
Provisions that should be included in a
typical warranty section:
Based on the answers to the questions above, the warranty
section should include some of the following warranties:
• Licensor warrants that the Software shall substantially
conform to the Functional Specifications.
• The software or service provider has necessary equipment
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and trained personnel to perform the services consistent
with industry standards.
• The software will be free of material or hidden defects.
• The services will be performed in workmanlike manner.
• The services will be performed in accordance with in-
• The software or service provider will comply with all
• The software or service provider warrants that itmaintains
an information security process with physical safeguards
appropriate for the sensitivity of customer information.
• The warranty will have a time period, such as thirty (30)
to sixty (60) days.
• *This is not an exhaustive list.
Remember, warranty sections are contractual promises on how
the software or services will perform. It is always important
to seek advice from experienced legal counsel in order to un-
derstand all the risks involved when negotiating software and
Stephen F. Pinson is an attorney at Scott & Scott LLP — a
business, intellectual property, and technology law firm— in
Southlake, TX. He represents clients involvedwith intellectual
property and technology disputes. Specifically, he assists clients
with corporate and technology transactions. He also defends
clients in software licensing and copyright infringement mat-
ters. Prior to joining the firm, Mr. Pinson practiced in high-
stakes securities litigation, regulation, and enforcement actions.
He spent the majority of his time prosecuting and defending
large corporate clients, institutional investors, andWall Street
firms. Before entering the legal profession, he was a financial
analyst for a large international investment bank. He may be