Invoke Warranty

Invoke Warranty means to formally call upon, or trigger, the warranty provisions of a contract when the goods or services supplied fall within the applicable warranty. It is a post-delivery step in contract administration. It starts the process by which a defect or non-conformity is put to the supplier for correction.

The Government of Canada Supply Manual uses the exact form "Invoke Warranty" as a named contract administration activity. It lists "Enforce Warranty" as a separate, follow-on activity, so the two steps are not interchangeable. The Supply Manual is published on publications.gc.ca.

How the Supply Manual treats Invoke Warranty

The Supply Manual sets out procedures used by Public Works and Government Services Canada (PWGSC), now Public Services and Procurement Canada, and by other federal program participants. Within those procedures, Invoke Warranty is a distinct activity. Enforce Warranty is listed beside it as a different one.

Responsibility for invoking a warranty depends on who holds title to the goods. Where the Crown still has title, PWGSC invokes the warranty provisions where applicable. Where the recipient country has title, another participating organization informs PWGSC. CIDA is identified as a participant in this process. The full wording is in the Supply Manual extract.

Recovering warranty-related costs

The Supply Manual also addresses what happens when a contractor must make good under warranty provisions. The contracting officer may allow recovery of reasonable direct labour and direct material costs. Overhead and profit are not recoverable, and everything remains subject to the contract terms. This is set out in the 2008 Supply Manual edition.

If reasonable warranty costs are to be allowed, an appropriate legally approved contract clause must authorize them. The contract should also include a line item for those costs. This requirement appears in an earlier Supply Manual extract. A supplier that expects to bill for warranty work needs that clause and line item in the contract.

The warranty mechanism in NATO contract terms

NATO's published contract conditions do not use the exact phrase Invoke Warranty, but they set out the warranty mechanism that invocation relies on. Under the NATO General Terms and Conditions, the warranty period begins upon NATO's acceptance. It is the longest of these periods:

• the contract-specific period
• the manufacturer's warranty
• the warranty implied by law
• six months

During that period, the supplier must correct, without cost to NATO, breaches of applicable express or implied warranties on the products, supplies or services.

The NATO Communications and Information Agency adds a requirement on claims. Its contract conditions require the contractor to designate an organizational point of contact for warranty claims. They generally prohibit delegating that responsibility to suppliers or original equipment manufacturers without the purchaser's agreement.

What Invoke Warranty means for a supplier

Read the warranty clause in every contract you bid on, because it controls what the buyer can call on and what you must do in response. When a defect or non-conformity is reported, confirm that the goods or services are within the warranty and identify the designated warranty contact. Then carry out the required correction, repair, replacement or other remedy within the stated conditions.

Price warranty work with the cost rules in mind. Direct labour and direct material may be recoverable only where the contract has an authorizing clause and a line item. Overhead and profit are not recoverable under the Supply Manual. On NATO contracts, correction during the warranty period is at no cost to NATO.