FAR 46.706—Warranty terms and conditions.
Plain-English Summary
FAR 46.706 explains how contracting officers should draft warranty terms and conditions so they are clear, enforceable, and priced appropriately. It covers the exact nature of the item covered by the warranty, the extent of the contractor’s obligations, the remedies available to the Government, the scope and duration of the warranty, the notice period for reporting defects, and marking or packaging requirements that alert recipients to the warranty. The section also gives guidance on how warranties should be tailored when the Government specifies the design versus when the contractor is responsible for design, and it addresses how express warranties interact with implied warranties in noncommercial contracts. In practice, this rule is about avoiding vague warranty language that creates disputes, leaves the Government without an effective remedy, or imposes unintended risk on the contractor. It also helps the contracting officer align warranty coverage with the item’s expected life, storage characteristics, trade practice, and the practical realities of repair, replacement, and transportation. For contractors, this section matters because it defines the cost and operational burden of post-acceptance defect correction and the circumstances under which they may be required to repair, replace, reimburse, or support repairs in place.
Key Rules
Warranty must be specific
The contracting officer must ensure the warranty clearly identifies the exact item covered, the contractor’s obligations, the Government’s remedies, and the warranty’s scope and duration. Clear drafting is required so the warranty can be priced and enforced without ambiguity.
Coverage depends on design responsibility
As a general rule, warranty obligations cover defects discovered during the warranty period, but not damage caused by the Government. If the Government specifies the design and related requirements, the warranty usually covers defects in material, workmanship, or conformance to specifications; if the contractor designs the item, the warranty can also cover design usefulness.
Express warranties can negate implied warranties
For noncommercial contracts, if express warranties are included, the clause must use specific language to negate implied warranties of merchantability and fitness for a particular purpose. This prevents overlapping or unintended warranty theories from expanding contractor liability.
Government remedies should be built in
A warranty should normally allow the Government to obtain an equitable adjustment or require repair or replacement at the contractor’s expense. If those remedies are impractical or inadequate, the warranty should provide alternatives such as price reduction, Government-arranged repair or replacement, or repair in place.
Repair costs usually include more than labor
Unless the warranty says otherwise, the contractor’s repair or replacement obligation includes the cost of labor and materials needed to reinspect, repair or replace, and test, inspect, package, pack, and mark the corrected items. The contractor also generally bears transportation costs for returning defective items and sending them back, subject to a commercial-method cap when items are returned from other locations or alternate remedies are used.
Duration must be reasonable
The warranty period must be stated clearly and set with reference to the item’s useful life, storage or shelf-life characteristics, and trade practice. The period cannot extend patent defect liability beyond a reasonable time after Government acceptance.
Notice period must be workable
The warranty must give the Government a reasonable time to notify the contractor after discovering defects, and that period must account for discovery time, administrative processing, and reporting of defective replacements. The notice period applies to all defects discovered during the warranty period.
Marking and packaging must alert users
Packaging and preservation requirements must require the contractor to stamp, mark, or otherwise notify recipients that the supplies are under warranty. This helps ensure the warranty is visible and usable after delivery.
Responsibilities
Contracting Officer
Draft warranty terms that are clear and enforceable; define the item covered, obligations, remedies, duration, notice period, and marking requirements; tailor warranty scope to whether the Government or contractor controls design; ensure express warranty language properly negates implied warranties in noncommercial contracts; and select remedies and time periods that are practical and commercially reasonable.
Contractor
Understand and price the warranty obligations; repair, replace, or otherwise remedy defective items as required; bear the specified costs of labor, materials, testing, packaging, and transportation unless the warranty states otherwise; furnish parts and installation instructions when in-place repair is required; and ensure warranty markings or notices accompany delivered supplies as required.
Government Users/Receiving Activities
Inspect and use the item in a way that preserves warranty rights; discover and report defects within the required notice period; document defects and defective replacements; and follow the contract’s procedures for invoking repair, replacement, equitable adjustment, or alternate remedies.
Agency
Support contracting officers in setting warranty policy and acquisition strategy, especially where the item’s life cycle, storage conditions, or trade practice affect warranty duration and remedy selection.
Practical Implications
Poorly drafted warranties create disputes over what is covered, how long coverage lasts, and what remedy the Government can actually enforce.
Contractors should price warranty risk carefully because repair obligations can include labor, materials, testing, packaging, marking, and transportation—not just the direct fix.
When the Government provides detailed design specifications, warranty exposure is usually narrower; when the contractor designs the item, design performance risk is broader.
Notice periods matter operationally: if the Government misses the deadline to report defects, warranty rights may be lost even if the defect existed during the warranty period.
Marking and packaging requirements are easy to overlook, but they are important because they preserve visibility of warranty coverage after delivery and reduce later proof problems.
Official Regulatory Text
(a) To facilitate the pricing and enforcement of warranties, the contracting officer shall ensure that warranties clearly state the- (1) Exact nature of the item and its components and characteristics that the contractor warrants; (2) Extent of the contractor’s warranty including all of the contractor’s obligations to the Government for breach of warranty; (3) Specific remedies available to the Government; and (4) Scope and duration of the warranty. (b) The contracting officer shall consider the following guidelines when preparing warranty terms and conditions: (1) Extent of contractor obligations. (i) Generally, the contractor’s obligations under warranties extend to all defects discovered during the warranty period, but do not include damage caused by the Government. When a warranty for the entire item is not advisable, a warranty may be required for a particular aspect of the item that may require special protection ( e.g., installation, components, accessories, subassemblies, preservation, packaging, and packing, etc.). (ii) If the Government specifies the design of the end item and its measurements, tolerances, materials, tests, or inspection requirements, the contractor’s obligations for correction of defects shall usually be limited to defects in material and workmanship or failure to conform to specifications. If the Government does not specify the design, the warranty extends also to the usefulness of the design. (iii) If express warranties are included in a contract (except contracts for commercial products and commercial services), all implied warranties of merchantability and fitness for a particular purpose shall be negated by the use of specific language in the clause (see clauses 52.246-17 , Warranty of Supplies of a Noncomplex Nature; 52.246-18 , Warranty of Supplies of a Complex Nature; and 52.246-19 , Warranty of Systems and Equipment under Performance Specifications or Design Criteria). (2) Remedies. (i) Normally, a warranty shall provide as a minimum that the Government may- (A) Obtain an equitable adjustment of the contract, or (B) Direct the contractor to repair or replace the defective items at the contractor’s expense. (ii) If it is not practical to direct the contractor to make the repair or replacement, or, because of the nature of the item, the repair or replacement does not afford an appropriate remedy to the Government, the warranty should provide alternate remedies, such as authorizing the Government to- (A) Retain the defective item and reduce the contract price by an amount equitable under the circumstances; or (B) Arrange for the repair or replacement of the defective item, by the Government or by another source, at the contractor’s expense. (iii) If it can be foreseen that it will not be practical to return an item to the contractor for repair, to remove it to an alternate source for repair, or to replace the defective item, the warranty should provide that the Government may repair, or require the contractor to repair, the item in place at the contractor’s expense. The contract shall provide that in the circumstance where the Government is to accomplish the repair, the contractor will furnish at the place of delivery the material or parts, and the installation instructions required to successfully accomplish the repair. (iv) Unless provided otherwise in the warranty, the contractor’s obligation to repair or replace the defective item, or to agree to an equitable adjustment of the contract, shall include responsibility for the costs of furnishing all labor and material to- (A) Reinspect items that the Government reasonably expected to be defective, (B) Accomplish the required repair or replacement of defective items, and (C) Test, inspect, package, pack, and mark repaired or replaced items. (v) If repair or replacement of defective items is required, the contractor shall generally be required by the warranty to bear the expense of transportation for returning the defective item from the place of delivery specified in the contract (irrespective of the f.o.b. point or the point of acceptance) to the contractor’s plant and subsequent return. When defective items are returned to the contractor from other than the place of delivery specified in the contract, or when the Government exercises alternate remedies, the contractor’s liability for transportation charges incurred shall not exceed an amount equal to the cost of transportation by the usual commercial method of shipment between the place of delivery specified in the contract and the contractor’s plant and subsequent return. (3) Duration of the warranty. The time period or duration of the warranty must be clearly specified and shall be established after consideration of such factors as (i) the estimated useful life of the item, (ii) the nature of the item including storage or shelf-life, and (iii) trade practice. The period specified shall not extend the contractor’s liability for patent defects beyond a reasonable time after acceptance by the Government. (4) Notice. The warranty shall specify a reasonable time for furnishing notice to the contractor regarding the discovery of defects. This notice period, which shall apply to all defects discovered during the warranty period, shall be long enough to assure that the Government has adequate time to give notice to the contractor. The contracting officer shall consider the following factors when establishing the notice period: (i) The time necessary for the Government to discover the defects. (ii) The time reasonably required for the Government to take necessary administrative steps and make a timely report of discovery of the defects to the contractor. (iii) The time required to discover and report defective replacements. (5) Markings. (i) The packaging and preservation requirements of the contract shall require the contractor to stamp or mark the supplies delivered or otherwise furnish notice with the supplies of the existence of the warranty. The purpose of the markings or notice is to inform Government personnel who store, stock, or use the supplies that the supplies are under warranty. Markings may be brief but should include— (A) A brief statement that a warranty exists; (B) The substance of the warranty; (C) Its duration; and (D) Who to notify if the supplies are found to be defective. (ii) For commercial products (see 46.709 ), the contractor's trade practice in warranty marking is acceptable if sufficient information is presented for supply personnel and users to identify warranted supplies. (6) Consistency. Contracting officers shall ensure that the warranty clause and any other warranty conditions in the contract ( e.g., in the specifications or an inspection clause) are consistent. To the extent practicable, all of the warranties to be contained in the contract should be expressed in the warranty clause.