Do contracts include warranties for delivered code?

Warranties and guarantees in developer contracts are legal promises that protect clients from defective, insecure, or non-compliant software. They are central to building trust and ensuring accountability, particularly when software is mission-critical or involves sensitive data.

What are warranties in code delivery?

‍A warranty is a contractual assurance that the delivered code meets agreed specifications. It usually covers functionality, quality, performance, and legal compliance. Warranties help clients avoid the risk of paying for unusable or non-compliant software.

Common types of warranties

• Functionality warranty: Code will perform according to documented requirements.
  
• Defect-free warranty: Software is free from material bugs at delivery.
  
• IP warranty: Code does not infringe on third-party intellectual property rights.
  
• Security warranty: Software adheres to minimum cybersecurity practices (encryption, access controls).
  
• Compliance warranty: Meets standards such as GDPR, HIPAA, or PCI-DSS where relevant.
  

Warranty periods

• Typically 30–90 days post-delivery.
  
• Developers must fix bugs discovered during this time at no extra charge.
  
• Longer warranties (up to 12 months) appear in high-value enterprise contracts.
  

Guarantees vs. warranties

• Warranties are enforceable contractual obligations.
  
• Guarantees are broader assurances, sometimes tied to service quality or satisfaction. Guarantees may not always be legally binding but strengthen trust.
  
  

Remedies for breach

‍If warranties are breached:

• Fixes: Developer must correct defects at no cost.
  
• Replacements: In extreme cases, defective modules must be rewritten.
  
• Damages: Clients may claim financial compensation for business losses.
  
• Termination rights: Contracts may allow termination if defects are not fixed.
  

Exclusions and limitations

‍Developers often limit warranties to:

• Bugs reported within the warranty period.
  
• Exclusion of defects caused by client misuse or unauthorized modifications.
  
• Liability caps (e.g., tied to project fees).
  
  

Regional differences

• US: Strong reliance on Uniform Commercial Code (UCC) warranties.
  
• EU: Consumer protection laws extend implied warranties even if contracts don’t specify.
  
• Asia: Practices vary, but enterprise deals often mirror EU/US models.
  

Best practices

• Define warranty scope and duration clearly.
  
• Document acceptance criteria for delivered code.
  
• Require developers to fix defects during the warranty period for free.
  
• Align warranties with IP indemnification to prevent infringement risks.
  
• Ensure exclusions are reasonable and not overly broad.
  

Industry examples

• A fintech startup requires a 90-day warranty covering performance and PCI compliance.
  
• A SaaS vendor promises bug fixes within 5 days during a 60-day warranty period.
  
• A freelance marketplace includes a 30-day default warranty for delivered code.
  

Conclusion

‍Warranties and guarantees safeguard software quality, build trust, and reduce legal risks. Well-drafted warranty clauses protect clients from defective or insecure code while ensuring developers are not unfairly exposed to unlimited liability.

Step-by-step

1. Define Scope: Specify what the warranty covers (functionality, IP, security).
   
2. Set Duration: Agree on warranty length (e.g., 30, 60, 90 days).
   
3. Document Acceptance Criteria: Outline how code quality is evaluated.
   
4. Clarify Remedies: State whether fixes, replacements, or damages apply.
   
5. Include Exclusions: List what’s not covered (e.g., misuse, third-party code).
   
6. Add IP Clauses: Ensure code is free from infringement.
   
7. Address Compliance: Link warranties to industry/legal standards.
   
8. Cap Liability: Define maximum financial exposure for developers.
   
9. Review Periodically: Adjust warranty language as project scale or law evolves.
   

Use Cases

• SaaS startup: Demands a 90-day bug-fix warranty to reassure investors of product stability.
• Freelancer: Offers a 30-day functionality warranty but excludes third-party plugin issues.
• Enterprise contract: Includes IP warranties plus indemnification against infringement claims.
• Healthcare firm: Requires security and compliance warranties tied to HIPAA.
• Marketplace platform: Provides default warranties to standardize agreements across developers.

Pros & Cons

Pros
• Builds client trust through accountability
• Reduces legal risk of defective or infringing code
• Provides clear remedy pathways for issues
• Encourages higher-quality deliverables

Cons
• Short warranty periods may miss long-term defects
• Broad warranties increase developer liability
• Enforcing remedies can delay projects
• Regional differences complicate contract drafting

TL;DR

• Contracts often include 30–90 day warranties for bug fixes and functionality.
  
• Warranties cover functionality, IP, security, compliance.
  
• Guarantees strengthen trust but may be non-binding.
  
• Clear warranty clauses = trust, quality, accountability.