A warranty is a statement from the vendor stating that they certify that they will be responsible for something that happens after the sale of the business that relates to the time that they owned the company. For example prior tax liabilities. They may warranty that they will reimburse you for the liabilities. Keep in the tax authorities do not care who owns the business, the company is liable for the taxes, interest and penalties and the current business owner must go after the previous business owner. Do not assume that the previous owner will take care of the situation. What happens if they tell they will but they don’t. The tax authorities foes after the company. It is very important that your lawyer include what they feel relates to your situation in your purchase and sales agreement.