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Updated October 9, 2023Definition A warranty is a claim or promise made by a seller. Often during large financial transactions, the buyers or investors will ask for a series of warranties to be included in the contract. These warranties are a set of promises the seller must ensure are met or true for the contract to be honored. These warranties must be met at the time of contract completion and may need to be maintained for an agreed period of time after the completion date.
Warranties give the party receiving them (in most cases the buyer or investor) the right to sue for damages if the warranty is breached and the breach causes loss or liability. In short, these fundraising and exit events will require you to make legally binding commitments regarding aspects of your business.
Increasingly now, cybersecurity is included amongst these warranties and as such, we need to know how to stay safe and meet our warranty obligations, for our company’s success (and our own).
Given the legal profession’s love of creating new and inventive clauses, there really is no set of fixed cybersecurity warranties. Let’s take a look at some themes you can expect:
The cybersecurity program and details you provided when asked were accurate, truthful, and up to date.
Your systems or products have been validated, audited, or reviewed by a qualified third-party organization and the results were accurately made available on request.