These terms are often used interchangeably in business, but they are each very different in legal substance and scope.
As such, they merit close attention, as providing one as opposed to another in error or ignorance can have far reaching legal conseqences that could end up in court, the risks of which are covered in our post entitled "The Dangers of Litigation to Corporate StressBusting™".
Put as simply as possible, the definitions of each are as follows:-
● A warranty is a contractual statement of guarantee as to the state or quality of goods or services which provides the recipient with a right of replacement, repair or financial correction if it guaranteed statement transpires to have been untrue at the time it was made or for the period the warranty is stated to endure
● An indemnity is where a person or organisation contractually agrees to reimburse, pound for pound, potential losses and damage suffered by another person or organisation from their own actions or those of a third party, in a particular event or occurrence
● A guarantee is a contractual guarantee by a person or organisation of another party's contractual obligations which renders the provider of the guarantee (the "guarantor") secondarily liable in the event that the person in whose favour the guarantee is provided defaults on their obligations.
Review contracts carefully to ensure you are appraised of any such binding obligations you are assuming, as ignorance or mistake are very rarely a defence in an arm's length business environment - see our post entitled "Extend your Vocabulary to Stressbust™".
And always decide on a fully informed basis which you or the business are comfortable providing in a given set of circumstances.
As these are complex legal concepts, if in doubt, consult a line manager or an expert in advance of committing yourself or your organisation to any of them.
And try to limit them in scope or time duration as possible or necessary.
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