UCC Warranties vs. Contractual Warranties: What Happens When a Defective Product Leads to a Business Lawsuit?

Imagine this: Your business purchases a large shipment of products from a supplier, and upon arrival, they’re defective. Your customers are upset, operations are disrupted, and now your business is absorbing the losses. The first question that usually comes up is:

“Can we sue for damages?”
Closely followed by:
“What kind of warranty applies here—UCC or contractual?”

These questions aren’t just academic. They determine what rights you have, what legal standards apply, and what remedies are available in a business dispute involving defective goods.

At our law firm, we regularly represent clients across Florida in commercial disputes like these. Whether you’re a buyer or a seller, understanding the difference between UCC warranties and contractual warranties is crucial when a product defect escalates into a lawsuit.

What Is the UCC and How Does It Apply to Defective Products?

The Uniform Commercial Code (UCC) is a set of laws that governs sales of goods across the U.S., including Florida. Under the UCC, certain warranties are automatically included in sales contracts—even if you don’t put them in writing.

UCC Warranties Include:

• Express Warranties: Created by a seller’s affirmations, descriptions, or samples that become part of the basis of the bargain.
• Implied Warranty of Merchantability: Goods must be fit for ordinary purposes if sold by a merchant.
• Implied Warranty of Fitness for a Particular Purpose: If the seller knows the buyer is relying on the seller’s expertise to select a suitable product, the product must be fit for that use.

These warranties exist by law unless they’re properly disclaimed.

What Are Contractual Warranties?

A contractual warranty is any warranty specifically negotiated and written into the agreement between buyer and seller. This includes:

• Extended warranties
• Product performance guarantees
• Limitations on remedies or damages
• Exclusions of liability

While UCC warranties may apply automatically, contractual warranties are the result of private negotiation, and they can override or limit UCC warranties if drafted correctly.

What Happens When There’s a Defective Product Dispute?

If a product causes business losses, the first thing your attorney will look at is the contract. Here’s how we typically approach it:

Step 1: Review the Sales Agreement

• Is there a written contract?
• Does it mention warranties or disclaimers?
• Are there any limits on liability or exclusive remedies?

Step 2: Analyze UCC Coverage

Even if the contract says little or nothing about warranties, the UCC may still apply. For example:

• If the product doesn’t work as expected for ordinary use, that could violate the Implied Warranty of Merchantability.
• If the seller gave advice on which product to use and it failed, that could trigger the Implied Warranty of Fitness for a Particular Purpose.

Step 3: Determine Remedies

If a warranty was breached, whether under the UCC or contract, you may be entitled to:

• Refunds
• Repair or replacement
• Consequential damages (like lost profits)
• Revocation of acceptance (returning the goods) 

But keep in mind, many contracts limit remedies. That’s where a skilled attorney comes in, we evaluate whether those limitations are enforceable under Florida law.

Can You Sue for a Defective Product Under the UCC?

Yes. In Florida, a business can file a lawsuit under the UCC for breach of warranty if:

• The sale involved goods (not services).
• The product was defective or unfit for its intended purpose.
• There was no valid disclaimer of warranties, or the disclaimer was unenforceable.
• You provided timely notice of the defect (as required under the UCC).

This is particularly common in wholesale, retail, manufacturing, and distribution disputes.

Common Questions About UCC and Contract Warranties

Can a Contract Override UCC Warranties?

Yes. But to be enforceable, the waiver or limitation must be:

• Clearly written
• Conspicuous (not buried in fine print)
• Not unconscionable or against public policy

What if the Warranty Period Has Expired?

Some contracts limit warranty claims to a specific time (e.g., 12 months). But under the UCC, you generally have four years from the date of delivery to bring a breach of warranty claim, unless the contract says otherwise.

Can I Recover Lost Profits or Business Interruption Costs?

Possibly. If the defect directly caused measurable business losses, you may be entitled to consequential damages, though some contracts exclude them. Whether that exclusion is enforceable depends on the facts of your case.

How to Protect Your Business Before a Dispute Happens

Here’s how business owners can reduce risk from the outset:

• Read Supplier Contracts Carefully: Don’t assume warranties are in your favor.
• Ask What Warranties are Being Provided: Get them in writing.
• Avoid Boilerplate Agreements: They often favor the supplier.
• Work with an Attorney: To negotiate terms or assess risks before signing.

At Ayala Law, we review, draft, and litigate commercial contracts to ensure our clients are protected from both legal and operational blind spots.

Business Lawsuits Over Defective Products Are Avoidable—If You’re Prepared

When a defective product leads to business losses, you need to know what rights you actually have, and whether they come from a written contract, the UCC, or both.

If you’re facing a product-related dispute or want to make sure your business contracts are legally sound,  contact an experienced attorney in Miami at 305-570-2208.

You can also contact attorney Eduardo A. Maura at eduardo@ayalalawpa.com.

Schedule a case evaluation online here.

[The opinions in this blog are not intended to be legal advice. You should consult with an attorney about the particulars of your case].