The term “warranty” is an importation from English law terminology and generally refers to a term of a contract as opposed to a mere puff or representation.
A warranty is a term whereby a party assumes contractual liability for the existence of a certain state of affairs or the occurrence of an event. It can relate to a past, present or future state of affairs or event.
It imposes strict liability on the person giving the warranty, who will not be able to escape liability on the basis of impossibility of performance or absence of fault.
A warranty is a ‘representation’ as to a given state of affairs which induces the warrantee to contract. It is an undertaking concerning either the skill with which an obligation will be performed, the quality or quantity of the subject matter of the contract or the absence of defects in the subject matter of the contract.
A breach of a warranty constitutes a breach of the agreement in which it is contained and consequently the normal remedies flowing from a breach of contract and at common law shall apply.
The damages claimable in the case of a breach of warranty may not only comprise compensation for actual loss suffered (damnum emergens), but also the gains which the claimant would have made but for the breach (lucrum cessans). In addition, consequential losses may also be claimable under breach of warranty where such damage has not been expressly excluded in the contract.
In Peach Publishing v Slater (1998) management accounts were produced and the purchaser asked the accountant for an assurance that she could rely on the management accounts. The accountant indicated that a warranty can be given. After the sale was executed, it was discovered that the profit projections were significantly overstated.
The appeal court held that the surrounding circumstances of a transaction must be assessed to determine the existence of a warranty. The question that needs to be asked whether, having regard to all the circumstances of the case and looking at the matter objectively, it can be said that the person giving the warranty undertook responsibility to the person receiving the warranty for the warranty being made.
The Consumer Protection Act 68 of 2008 (“CPA”) establishes an implied warranty of quality on most goods.
Section 55 of the CPA provides that each consumer has the right to receive goods that are reasonably suitable for the purposes for which they are generally intended, are of good quality, in good working order, are free from any defects and will be usable and durable for a reasonable period of time, having regard to the use to which they normally would be put and all surrounding circumstances of their supply.
Section 55 is substantiated by section 53 which provides that in any transaction or agreement pertaining to the supply of goods to a consumer, there exists an implied warranty that the producer or importer, the distributor and the retailer each warrant that the goods comply with the requirements and standards contemplated in section 55.
If the goods fail to satisfy such standards and requirements, the consumer may, without penalty and at the suppliers risk and expense, within 6 months after delivery of any goods to a consumer, return the goods to the supplier. The supplier must, at the discretion of the consumer, either repair or replace the failed, unsafe or defective goods, or give a refund to the consumer of the price paid by the consumer for the goods.
Section 55(4) states that it is irrelevant whether a product failure or defect was latent or patent or whether it could have been detected by a consumer before taking delivery of the goods. A warranty imposes strict liability on the person giving the warranty, who will not be able to escape liability on the absence of fault.