A warranty in a commercial contract is an express promise by the seller regarding the quality, performance, or lifespan of delivered products or services. In our practice, we see entrepreneurs who provide warranties that are too broad without realizing the legal implications. A well-structured warranty clause offers commercial added value without incurring unacceptable liability. The Dutch Civil Code and CISG provide the framework; your contract determines how far you go.
What is the legal issue?
A warranty entails an express promise regarding quality, performance, or duration. Non-performance leads to repair, replacement, a price reduction, or compensation. Scope, time limits, and burden of proof vary internationally. Vague warranties offer buyers broad options, while warranties that are too narrow are commercially unattractive. A well-structured warranty offers security without unacceptable liability.
What does the law say?
Under Dutch law, in addition to contractual warranties, an obligation of conformity follows from Article 7:17 of the Dutch Civil Code: the goods must conform to the agreement. Under CISG, Articles 35-44 apply to conformity, complaints, and defects. Article 35 CISG requires that goods meet the quality, quantity, and description stated in the contract and be fit for the purpose for which they are intended.
Stricter law applies to consumers under Directive (EU) 2019/771 (sale of goods), implemented in the Netherlands in Article 7:18 BW et seq. B2B contracts offer more scope to limit warranties under Article 7:6a paragraph 4 BW (only consumer law is mandatory).
What risks do companies face?
Unlimited warranties expose you to claims that exceed your margin. Double warranties in the contract and general terms and conditions lead to conflicts of interpretation. Misinterpretation of conformity under CISG can result in extensive remedies. Foreign courts may apply consumer rules to B2B contracts if purchasers are in an actual weaker position. Reputational damage undermines subsequent contracts.
Practical example from our practice
We advised a Dutch manufacturer offering a five-year manufacturer's warranty without limitation on consequential damages. In the event of a serial defect in products delivered to a French distribution channel, claims ran to many times the contract amount — approximately 1.4 million euros. Upon renegotiation, we incorporated: a two-year warranty for parts, no labor, explicit exclusion of consequential damages, a ceiling of 100,000 euros per claim, and a complaint period of 30 days after discovery. The next incident was handled within the ceiling.
What can you do?
Define the scope (which defects, which remedies). Determine the duration and geography of the warranty. Explicitly exclude consequential damages and indirect damages. Align with liability limitations and ceilings. Regulate the complaint procedure, time limits, and evidence. Combine with conformity obligations under Article 7:17 of the Dutch Civil Code. For consumers: respect mandatory law under Article 7:6a of the Dutch Civil Code. See also our article on Representations & Warranties explained.