Most failed ERP lawsuits brought against a software vendor include a claim for breach of warranty. Prior to the start of any Enterprise Software project, the warranty provisions within all contracts and agreements should have been reviewed and negotiated by the parties. These warranty provisions are often accompanied by disclaimers of warranties and a limitation of remedies. Before filing a lawsuit against your ERP vendor asserting a breach of warranty claim, it is imperative that you fully understand what types of warranties are contained in the contract.
Generally, ERP warranties are broken down into categories comprising of express warranties and implied warranties, and may be covered by the Uniform Commercial Code (“UCC”). Express warranties are explicitly stated guarantees from the ERP vendor to the ERP customer that a product or system will meet a certain level of quality and performance. On the other hand, implied warranties are based on the reasonable expectations of the ERP customer that the product or software will work as claimed. One of the most common types of implied warranties is the implied warranty of merchantability, which means that the good or system will be fit for the ordinary purpose of an ordinary buyer’s expectations.
While an ERP vendor may attempt to disclaim all warranties that aren’t explicitly contained within the four corners of the contract, not all U.S. states allow ERP vendors to escape liability merely by disclaiming all warranties. Further, although all fifty states have substantively adopted the UCC, there are important differences based on the local customs of each jurisdiction.
Consequently, a breach of warranty claim against your ERP Vendor may not be a straightforward claim due to the intertwining provisions in the contract. A breach of warranty action is further exacerbated if multiple contracts or agreements were executed for the implementation project, or if there are third-party vendors involved, each with separate agreements for their product or scope of work on the project. You must be cognizant of what your ERP Vendor has or has not guaranteed. An experienced ERP attorney or third-party expert may help determine whether these warranties have been breached.
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