Protecting Your Investment: Warranties in Your EPC Contract
An EPC contract gets the job done, but what happens if things go wrong later? Warranties provide peace of mind, ensuring the contractor stands behind their work.
Here’s how to ensure your warranties are clear and effective:
- Knowing What’s Covered:
- The contract should clearly define what’s covered under the warranty. This includes the specific products, services, and the level of performance expected. Ambiguity here can lead to disputes down the road.
- Fixing the Problem, Not Just Words:
- Warranties should be “make-good” obligations. In simpler terms, if something breaks, the contractor fixes it (or replaces it) at their own expense. This ensures a swift resolution and protects your investment.
- A Defined Timeframe for Action:
- Warranties typically have a set “warranty period” that starts from the date you accept the project. A common timeframe is 12 months, but this can be adjusted based on the project complexity.
- A Final Cut-Off Point:
- Beyond the warranty period, there’s a final cut-off date, usually around 24 months from acceptance. This provides a clear endpoint for the contractor’s warranty obligations.
- Focus on the Explicit, Exclude the Implicit:
- The contract should make clear that the specified warranties are exclusive. This means any implied warranties by law, like merchantability or fitness for purpose, are disclaimed.
- Addressing Hidden Flaws:
- Completely excluding liability for hidden defects might not be possible. If so, define the company’s obligations clearly.Focus on limiting responsibility to significant defects that truly impact the project’s performance.
- Timely Reporting is Key:
- The contract should establish a timeframe for reporting any defects after project acceptance. This ensures prompt notification and avoids issues arising later. Additionally, the contract should exclude liability for any damage caused after the warranty period ends.
By including these provisions, your EPC contract establishes clear and enforceable warranties. You’ll have peace of mind knowing the contractor is responsible for fixing any issues that arise during the defined warranty period.
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