United States: Warranty/Guaranty Provisions In Construction Contracts

Last Updated: August 3 2015
Article by Michael A. Scheffler

The most confusion I have seen in the discussion of construction topics concerns the concepts of "warranty" and "guaranty." This article will address the confusion, explain the important distinctions between these two concepts, and describe how to effectively administer and enforce warranty and guaranty provisions in construction contracts.


In a typical construction contract warranty provision, the contractor "warrants" or "represents," or covenants, that its work will be performed in accordance with certain standards stated in the contract (e.g., in "a good and workmanlike manner") and otherwise be free of defects and in conformity with the design documents. While the term "warranty" or "warrants" is often used in connection with this concept, it really pertains to any provision in the contract, whether a representation or a covenant, which prescribes a standard of performance governing the contractor's work.

The remedy for breach of the "warranty" is the recovery of monetary damages incurred by the other party (e.g., the project owner or general contractor) by reason of the breach. So, for example, if defective materials need to be repaired or replaced by the owner, the owner is entitled to recover from the contractor the cost of the repairs or replacement made by the owner.

The duration of the warranty will sometimes be designated in the contract (or design specifications), but if not, the statute of limitations period for contract breaches will constitute the time frame for enforcement (in New York, for example, the period is six (6) years from the accrual of the cause of action).


A typical guaranty (or guarantee) provision becomes operative after completion of the contractor's work, and requires replace defective or non-conforming materials or equipment, or remedy improper workmanship, at its own cost and expense.

The contract, or design specification, containing this obligation generally provides for an expiration date or period beyond which the guaranty is no longer enforceable. The design specifications may contain certain guaranty time periods that are longer than the time period provided for in the contract, so it is important to state in the contract that the longer period prevails.

The term "guaranty" may not be used to characterize this obligation, and often the word "warranty" is used, which can generate confusion because of the different remedies available under a true "guaranty" and a true "warranty."


The confusion surrounding the different concepts of "warranty" and "guaranty" can create the following problems in drafting or enforcing the construction contract:

  • As stated earlier, the term "warranty" may be used when, in fact, the so-called "warranty" is really a "guaranty." So, for example, the contract may state that the contractor "warrants that the materials will be free from defects and that the contractor will repair or replace any defective materials within two (2) years after completion of the work." The first part of this provision is a true "warranty," but the second part is really a "guaranty." By conflating these two concepts in one sentence, the drafter has created uncertainty as to the time period for enforcement of the true "warranty"—is it two (2) years or the statute of limitations period for breach of contract (in New York, six (6) years)? If the first part of the sentence were segregated from the second part, into two different provisions, as shown below, there is no doubt that the enforcement period for the warranty remedy (i.e., recovery of damages) is the statute of limitations period:
    • "The contractor warrants that the materials will be free from defects."
    • "If any materials are found to be defective within two (2) years after completion of the work, the contractor will repair or replace said materials."
  • The term "guaranty" may be used, mistakenly, instead of the term "warrant," which can result in a contractor "guarantying" that the work will be performed in a good and workmanlike manner and otherwise be free of defects and in conformity with the design documents. That might be fine by itself, but because the drafter was thinking that the provision operated as a "warranty," important "guaranty" elements may have been omitted (such as, for example, the obligation to commence repairs within a designated time frame and prosecute the repairs to completion, and the obligation to replace inherently defective materials).
  • On the other hand, the terms "warrant" or "represent" may be used instead of "guaranty" or other covenantal language, which may limit the owner's remedy to the recovery of damages for breach of the warranty or representation, whereas the owner may have thought that it could require the contractor to return to the site and correct the defective work.

Enforcement of Warranties and Guaranties

The other party to the construction contract is entitled to enforce the contractor's guaranty or warranty, as well as any other party who is named as a beneficiary of the guaranty or warranty provisions (e.g., the owner, if the contract is with a subcontractor) or to whom the contract (or separate guaranty or warranty document) has been assigned.

When assessing the contractor's responsibilities, the enforcing party should make sure it reviews any warranties or guaranties contained in the design specifications, in addition to those set forth in the contract.

It is also important to note that if the warranty breach is discovered during the "guaranty" period, the breaching party should be given the opportunity to remedy the defective work; otherwise, that party may have a defense to a damage claim under the warranty provision (at least to the amount of damages sought), arguing that it could have mitigated the damages if it had corrected the defect itself. After the guaranty period has expired, there is no obligation to afford the breaching party the right to repair the work itself, but there may be business or practical reasons to do so.

The owner is, of course, the direct beneficiary under the guaranty and warranty provisions in the prime contract (i.e., the agreement with the General Contractor ("GC") or Construction Manager ("CM")), and the prime contract should require that the owner be named a third-party beneficiary under the guaranties and warranties provided by each subcontractor (whether in its subcontract or a separate warranty/guaranty document). The owner should have the option of enforcing its rights against the GC/CM or the subcontractors. If the owner elects to go directly against a subcontractor while its warranty or guaranty rights against the GC/CM have not yet lapsed, it would be advisable to involve the GC/CM in the process in order to preserve its warranty and/or guaranty claims against the GC/CM. In fact, the prime contract should provide that the GC/CM must, at the owner's discretion, either enforce the warranties or guaranties against the subcontractors or assist the owner in its prosecution of the warranties or guaranties.

Even though the owner will have recourse against the GC/CM, it is important for the following reasons that the owner ensure that the warranty and guaranty benefits it expected to receive from the subcontractors are actually memorialized and the documents granting such benefits are secured by the owner for its files:

  •  the warranty or guaranty periods in the prime contract may be shorter than the periods afforded by a particular subcontractor;
  •  if the GC/CM becomes bankrupt or otherwise ceases operations, the only recourse available to the owner may be against a subcontractor; and
  •  there may be an independent business relationship between the owner and the GC/CM, making it inadvisable for the owner to seek recourse against the GC/CM.


It is essential that owners, contractors, and their lawyers understand the key distinctions between warranties and guaranties, and are mindful of these distinctions in drafting and enforcing the prime contract or subcontract.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions