On paper, automation projects may seem simple. Hardware is delivered. A line is integrated. Performance goals are guaranteed. Then the system is exposed to the real world – site conditions, operator habits, old equipment, production pressure, and deadlines. It is usually at this point that disagreements arise, not due to anyone’s bad faith, but because the contract did not specify clearly who is responsible when things go off track.
Teams evaluating vendors like Progressive Automations often focus on technical fit first. That is smart. But the contract is what decides who pays for downtime, rework, replacement parts, on-site support, and missed targets when the system underperforms.
This article walks through the contract clauses that most often determine outcomes in automation disputes: scope and acceptance, warranties, liability caps, indemnities, and the practical “who pays” triggers that show up after commissioning.
Map the Project First – Scope, Assumptions, and Definition of Done
Most automation disputes start when “scope” means two different things. One side expects a turnkey system. The other believes it delivered components with limited integration. A strong contract prevents that gap by turning expectations into testable deliverables.
Scope should be specific and measurable. List what is included beyond hardware, such as drawings, electrical documentation, software configuration, integration work, training, and commissioning support. If the system must connect to third-party equipment, name it. If changes are expected after go-live, define what is included versus billable.
Assumptions also need to be explicit. Site readiness is a common weak spot. Power quality, compressed air, network stability, physical space, guarding, and environmental conditions can all affect performance. Operator skill and staffing levels matter too. The agreement should state who is responsible for meeting prerequisites and what happens if they are not met.
Finally, acceptance should be a checklist, not a feeling. Separate factory acceptance testing (FAT) from site acceptance testing (SAT). FAT verifies the build in controlled conditions. SAT confirms it performs in the real environment with actual materials, operators, and surrounding equipment. Define participants, data collected, pass criteria, retest rules, and sign-off authority. If throughput or uptime is promised, specify how it is measured and over what time window.
This matters even more in industrial automation projects, where a system is rarely a single product. It is a chain of equipment, control logic, safety devices, and operator procedures. A contract should treat that chain as part of the risk.
Warranties That Actually Matter in Automation
Warranties sound simple until a failure happens and everyone points to exclusions. The goal is to make warranties operational – tied to real scenarios, response times, and responsibility boundaries.
Start with the basics. Define the warranty term and what counts as a defect. Clarify whether the warranty covers parts only or includes labor and on-site service. If travel costs are excluded, state it. If the warranty is voided by unauthorized modifications, define what modification means. In automation, routine adjustments can look like modifications unless the contract draws a line.
Software and configuration are where warranty language often collapses. If the system includes firmware, control logic, or a settings file, specify who owns the responsibility to fix issues. Define whether updates are included, how long patches are provided, and how changes are tested before deployment. If updates are optional but recommended, clarify who decides and who pays.
Real-life scenario
Automation rarely comes as a single “one-vendor” package. A project may combine an OEM machine, third-party sensors and actuators, and a system integrator who makes the whole setup work as one. The contract should clearly split warranty responsibility between the manufacturer and the integrator. If it does not, claims often get passed around while the line stays down.
Documentation can protect both sides. Require maintenance logs, error reports, and a written incident timeline for warranty claims. If a vendor needs remote access or log exports to diagnose issues, define that access in the contract. A warranty that cannot be executed quickly is not a warranty. It is a frustration.
Liability Caps, Indemnities, and the Real Who Pays Question
When automation breaks down, the real cost is usually the stoppage, rushed labor, and missed shipments, not the part that failed. Contracts manage that risk through liability caps, exclusions, and indemnities. A cap only helps if it is clearly defined, such as fees paid or a stated multiple, and whether it applies per claim or across the whole agreement. Indemnities should spell out what triggers them and who controls the defense and settlement. Most disputes center on “consequential damages” like lost profits, which are often excluded unless there are carve-outs for serious fault. Subcontractors add risk. Flow-down terms should prevent accountability from slipping through the cracks.
When Automation Fails – Dispute Triggers and How Contracts Prevent Chaos
Failures rarely look like a single dramatic breakdown. They often show up as missed throughput, unstable controls, repeated safety faults, nuisance trips, or a system that runs only with constant babysitting. Contracts that prevent chaos do three things well: they control change, they define investigation steps, and they create a path to cure.
Change orders should be structured to reduce ambiguity. Define what counts as scope creep. Require written approval before work begins. Specify pricing rules for change orders and the timeline impact. Many disputes begin because change requests were handled informally under pressure.
Root-cause investigation should be defined in advance. If a failure occurs, the contract can require a joint review, access to logs, preservation of the machine state where safe, and a shared incident report. It can also specify how long the vendor has to respond and what “commercially reasonable” support means in practice.
Cure periods and escalation steps keep problems from turning into chaos. The contract should give the vendor a clear window to fix defects, then allow limited step-in rights if support stalls. It must also state whether emergency third-party costs can be recovered. Governing law and dispute rules still shape speed and leverage.
A Practical Contract Checklist for Automation Buyers and Vendors
Contracts work best when they mirror engineering thinking: define inputs, define outputs, and define what happens when conditions change. A short checklist helps teams catch the common gaps before signature.
- Define acceptance tests with metrics, timelines, and sign-off rules.
- Specify warranty scope, response times, and who covers labor and travel.
- Clarify software ownership, update obligations, and change management.
- Set liability caps and carve-outs in plain language tied to real risk.
- Require documentation access, logging, and a joint incident process.
- Flow down obligations to subcontractors and name critical third parties.
Build the Contract Like a Control System
Automation projects succeed when both sides can predict what happens next, even when something fails. A contract that clearly defines scope, acceptance, warranties, and liability does not kill momentum. It prevents guesswork at the worst possible moment.
The most practical goal is not to “win” a dispute later. It is to reduce the odds that a dispute starts at all. When the contract allocates responsibility the same way a well-designed system allocates control, the project stays focused on performance, reliability, and safety.
William Gall is a seasoned attorney specializing in civil litigation and family law. With a legal career spanning over two decades, William has built a reputation for his meticulous attention to detail and his unwavering commitment to justice. In addition to practicing law, he is a prolific writer, contributing regularly to various legal blogs where he shares his insights on current legal trends, case law, and best practices. His articles are well-regarded in the legal community for their thorough research and practical advice, making complex legal concepts accessible to both legal professionals and the general public.