If you're like most small ecommerce businesses, you'll write your own product/service descriptions. In doing so, you will encounter another legal pitfall... you may be creating unintended warranties that could result in substantial liability.

How can this be? How can you unwittingly create a warranty for which you will be held legally liable?

The Uniform Commercial Code (UCC) is a collection of state laws that are relatively "uniform" from state to state. These laws govern the sale of goods, among other things.

In order to understand how you may create an unintended warranty under the UCC, first you need to understand that there are 2 basic kinds of warranties:

• implied warranties; and
• express warranties.

Implied warranties are created under state law. They are unwritten promises that a product will, at the time it is sold, meet certain minimum conditions, such as:

• be fit for a particular purpose; and
• be generally of merchantable quality.

The UCC provides that you automatically make the implied warranties listed above for products, unless you properly disclaim them. So, if you want to avoid these unintentional implied warranties, you must disclaim them in both your Terms of Use and in your Customer Agreement.

Express warranties are promises that are explicitly offered to a purchaser, whether they appear in advertising, a formal contract or certificate, or some other form.

The most likely way to create an unintended express warranty is to provide a demo or a product sample on your website. The UCC provides that a demo or product sample would create an express warranty that your products conform to the demo or sample. You may, however, disclaim these warranties. So, again, if you want to avoid these unintentional express warranties, you must disclaim them in both your Terms of Use and in your Customer Agreement.

So, the lesson regarding warranties is that your objective should be to limit all warranties to express warranties where you control the terms and conditions by your carefully worded clauses. Important points to cover with express warranties include:

• the warranty period - how long does the warranty last (start with 90 days from purchase and work from there);
• specify the standards for performance (these should be objective, such as conformity with the user manual); and
• what is the remedy for warranty breach? (repair or replace, at your option).

All other warranties, both express and implied, should be disclaimed. That's the purpose of standard warranty disclaimers such as this one which is intended for use in your Terms of Use:

"EXCEPT AS MAY BE PROVIDED IN ANY SEPARATE WRITTEN AGREEMENT SIGNED BY THE PARTIES OR SEPARATE AGREEMENT ORIGINATING FROM T HIS SITE, THIS SITE AND ITS LICENSORS SPECIFICALLY DISCLAIM, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED, RELATING TO THIS SITE OR PRODUCTS, SERVICES AND/OR CONTENT ACQUIRED FROM THIS SITE, INCLUDING BUT NOT LIMITED TO, IMPLIED WARRANTIES OF MERCHANTABILITY, COMPLETENESS, TIMELINESS, CORRECTNESS, NON-INFRINGEMENT, OR FITNESS FOR ANY PARTICULAR PURPOSE."

We all like surprises from time to time... but not with unintended warranties. Unintended warranties can result in substantial liability for your website business, but they can be avoided altogether if you take the proper precautions.

Copyright © 2008 Chip Cooper

This article is provided for educational and informative purposes only. This information does not constitute legal advice, and should not be construed as such.

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Chip Cooper is a leading intellectual property, software, and Internet attorney who advises software and ecommerce businesses nationwide. Chip's 25+ years of experience include 20 years as Adjunct Professor of Computer Law at Wake Forest University School of Law. Visit Chip's digicontracts.com site and download his FREE report, "12 Sure-Fire Ways Your Website Can Get You Sued", and also learn about his "Do-It-Myself" and "Do-It-For-Me" service options.