Product Warranties in General – When we think of product warranties, we tend to think of things like an automobile warranty. You buy a new car, and the manufacturer warrants that it will fix manufacturing defects for four years or 48,000 miles, whichever comes first, at no charge to you. We all know what the warranty means, what the typical limitations are (e.g., normal wear and tear), and most of us have personal experience with making an auto warranty claim.
Standard Software Warranty – When it comes to software, however, the notion of a warranty is less clear to most. If you have ever read a software license, you know its warranty provision is long and wordy, many paragraphs appear in all cap’s (presumably to call attention to their special importance), and there is actually very little the vendor warrants. Normally a vendor will warrant only that its software “will perform substantially in accordance with its Documentation.” The remainder of the long warranty provision is devoted to establishing numerous exceptions and disclaimers to the already stingy grant of warranty.
Origin of the Standard Software Warranty – This type of software warranty provision was born at the beginning of our “software era,” when it was common for vendors to sell software that was truly “still in development.” Also, the platforms running software at the time were unstable. Under these circumstances, software vendors found it necessary to limit their exposure to warranty claims and consequential damages (“our software is not perfect, it may or may not do what you want it to do, and in all events, we’re not liable if our software causes your system to crash and you lose data, productivity and profits”).
Things Have Changed – Obviously, things are much different now. Within any software market segment today there are lots of competent vendors, and the increased competition (some call it “commoditization” of the software industry) has pretty much eliminated poor state of development at time of sale (Microsoft Vista aside). Technology platforms are also more robust and stable. All of these positive developments would suggest that software vendors could loosen up a bit and start offering more and better warranties for their products. Yet, the standard software warranty has not changed a bit.
Software Vendors Have Not Changed – Although software vendors could (comfortably) offer better warranties these days, they have no real incentive to do so. As long as the industry sticks with the same archaic and vacuous warranty provision, there is really no incentive for a given software vendor to offer anything more. The fact is, if you want more, you have to ask for it. And when you ask for more, be prepared to negotiate for it.
Change is Up to You – I have two bits of advice for you. First, stop thinking of software warranty provisions as being off-limits and non-negotiable. Just like every other contract provision, software warranty provisions are negotiable.
Second, start thinking of software warranties in broader terms. There are many aspects of your software purchases that are appropriate for your vendors to warrant, but they are usually overlooked by most buyers.
For example, consider integration issues. If you have been led to believe a software package is “fully integrated” with the ubiquitous SoftCo Communicator application—whether from reading a sales brochure, listening to sales pitches, or whatever—and this integration is important to you, then ask your software vendor to warrant its integration with this other product. More specifically, ask the vendor to warrant integration with your particular version and configuration of SoftCo Communicator.
As another example, consider sales materials in general. Do you want your software vendor to acknowledge that you relied upon its sales materials in making your buying decision, and to warrant that the sales materials are accurate and do not contain any misrepresentations? Should the sales materials be incorporated into your License Agreement?
What about use cases and demos? Are there aspects of either that stood out to your project team? Could and should these aspects be converted to warranties?
These are but a few examples. There are literally dozens of buyer-favorable warranty elements that should attach to any software purchase. You simply have to think about what is important to you—what will lower your risk, give you more and stronger rights, and in general, give you greater comfort.
Remedies – Remember, too, that for every special warranty element you seek, think about an appropriate remedy for its breach. Software vendors will often attempt to limit their liability to buy-back of their software (which is often enough), but think about going for more in special cases. For example, if your software vendor will be extending or customizing its software for you to some degree, you should think about recovery of service fees incurred up to the point where you hit the brick wall (breach of warranty is discovered).
Expected Outcomes – Whether and to what extent you get your enhanced warranty requests reduced to writing will be largely up to you and your negotiating ability. When a particular request is met with strong resistance from your vendor, there is usually a good reason. You did not get your SoftCo Communicator integration warranty, but you know why. The state of integration was overstated, and worse still, overstated in ways that are especially important to you. You did not get the warranty, but you now have better information about an important aspect of your buying decision—information that might not have come to light had you not taken an expansive approach to software warranties.