WARRANTY AND GUARRANTY

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There are some samples and templates of WARRANTY AND GUARANTY condition. It will help the Contractors and the Supplier to prepare the contract.SubContractor acknowledges that Contractor may be liable to the Employer for payment of liquidated damages should SubContractor fail to complete its Work in a timely manner. Accordingly, unless otherwise provided in Appendix 1 hereto, in the event that Contractor is assessed liquidated damages by the Employer due to failures by the SubContractor, liquidated damages shall be assessed against the SubContractor for each day that the SubContractor’s scope of work remains incomplete at the latest scheduled date for completion in the amount set forth in the Main Contract. Contractor may withhold such liquidated damages from any payment due to SubContractor. In addition, Subcontractor shall be responsible for any delay damages sustained by Contractor. What is a warranty in construction? https://www.turtons.com/blog/warranties-in-construction-contracts Although the word ‘warranty’ is frequently used in the construction industry, it is often used with different meanings This article explains how ‘warranties’ work in the context of a construction contract It is intended to assist principals, head contractors and subcontractors in negotiating and interpreting their contractual obligations What is the legal definition of a warranty? In a strict legal sense, the terms of a contract can be divided into three categories: conditions, warranties and intermediate terms If a 'condition' of a contract is breached, the innocent party will have the right to terminate the contract and claim damages If a 'warranty' is breached, the innocent party will not have the right to terminate the contract But it may still claim damages, assuming the breach causes a loss An 'intermediate term' lies somewhere between Whether the breach of an intermediate term will entitle the innocent party to terminate will depend on the circumstances, potentially including the severity of the breach However, when people in the construction industry talk about 'warranties', they are not usually thinking about this traditional legal classification What is the construction industry definition of a warranty? When people in the construction industry refer to ‘warranties’, they are probably referring to an obligation that arises from a document that has been signed or issued by the warrantor Alternatively, they might be referring to a warranty that arises under statute or is implied by law This article is focused on the first type of ‘warranty’ mentioned above – that is, warranties that appear in documents that are signed or issued by the person giving the warranty Why written warranties exist? The purpose of any warranty is to provide comfort, in the form of a legally enforceable obligation, to someone buying goods or services from the person giving the warranty Warranties are intended to clarify the parties' rights and obligations, and will often explain what should happen if something goes wrong For example, say you engage a contractor to perform work, and you this without signing a contract If the contractor’s work is defective, the law will probably supply you with a remedy You might have an action against the contractor in tort (negligence), under statute (such as trade practices legislation or specific building legislation), or (less commonly) in equity But sometimes, the law might not be clear about precisely what should be expected of the contractor For example, the law might be silent about the expected service life of the works, or in relation to specific performance characteristics of the works It is areas of uncertainty like these that warranties are intended to address A well-drafted warranty will describe precisely what is required of the contractor or supplier It will give you clarity around the circumstances in which a remedy is intended to be available The protections given by warranties can be invaluable, particularly where the law is silent or potentially ambiguous Contractual warranties generally supplement other legal rights that a principal or head contractor may have, including any remedies that may be available under applicable trade practices and building legislation Obtaining warranties from contractors and suppliers is one of the most practical ways principals (and head contractors) protect themselves against the risk of contractor, subcontractor and supplier non-performance What are collateral warranties in construction? A collateral warranty is a warranty that is given separately to the main contract that contains the parties’ primary obligations Usually, collateral warranties are signed by subcontractors and suppliers and are provided by a head contractor to its principal under a head contract Principals will often seek collateral warranties from subcontractors and suppliers to ensure that they can make a claim directly against the subcontractor, should the need arise Without a collateral warranty deed, the principal may not have a direct right of action against the subcontractor That can become a serious problem if the head contractor experiences an insolvency event This is the problem that collateral warranty deeds are often designed to address Collateral warranties will often be required by a principal in the form of a deed, to ensure that they are enforceable The two types of construction warranty: time-based warranties and general warranties Warranties in the construction industry typically fall into one of two categories: time-based warranties and general warranties Time-based warranties A time-based warranty is a binding promise that a particular thing will be in a particular state at a specific point in time, or remain in that state for a specified period of time For example, a contractor might be required to warrant that, on completion of their work, the work will comply with all applicable statutory requirements Or, as a separate example, a contractor might be required to give a warranty that (say) a structure will be waterproof on completion of the works, and that it will remain waterproof for a period of years This style of warranty is intended to give a buyer comfort that about the state, quality or performance characteristics of the goods or services they are buying at a particular point (or points) in time Time-based warranties are particularly important given that law will rarely specify how long things should be expected to last General warranties Within the meaning used by the industry, general contractual warranties are other contractual promises given by the contractor or supplier that are not time-based warranties For example, under AS 4902 (an Australian Standards form of design & construct contract), the contractor is required to 'warrant' that:  it is suitably qualified and experienced;  it has examined the preliminary design and the principal’s project requirements and that the design is suitable, appropriate and adequate;  it will carry out its design obligations in accordance with the principal’s project requirements;  it will carry out and complete the work under the contract in accordance with the design documents so that the works when complete are fit for their intended purpose; and  its consultants are suitably qualified and experienced Confusingly, some terms that are expressed as ‘warranties’ may in fact be intermediate terms or even conditions within a strict legal sense A breach of that type of ‘warranty’ may entitle the other party to terminate the contract For example, a contractor may be required to ‘warrant’ that it is appropriately licensed to perform the work If that warranty is breached, with the result that the contractor is not legally permitted to perform the work, the likelihood is that the principal would have the right to terminate the contract When someone starts talking about 'warranties', understanding the distinction between time-based warranties and general warranties will help you understand what they are talking about What happens if a warranty is breached? The consequences of a breach of warranty will normally depend on four things: Whether the obligation is of a kind, and the breach so serious, that the other party should be entitled to terminate the contract Whether the person with the benefit of the warranty has suffered any loss Whether the contract or warranty document explains what should happen where there is a breach When the claim is made If the contract explains what should happen in the event of the breach, the law will usually (but not always) treat the contract as a complete code The contract may explain how a party needs to claim for the breach, and it may also explain how the claim is intended to be resolved Some contracts will identify specific terms that, if breached, will entitle the innocent party to terminate Where a party suffers a loss as a result of a breach of warranty, and absent any terms of the contract to the contrary, the innocent party would usually be entitled to claim damages Damages for a breach of warranty are normally calculated with the aim of putting the innocent party in the position they would have been in, had the contract been performed The timing of a claim for breach can be critical Keep in mind that the expiry of the 'defects liability period' does not mean that the contractor can no longer be liable (You can read more about this here.) A claim brought after the period allowed by the applicable statute of limitations will be barred Takeaways for buyers (eg principals and head contractors) When you are buying goods or services from someone else, including construction services, you should seek to:  obtain warranties from that person;  obtain warranties from any other person in the supply chain who may be responsible for any material defects or other issues that emerge (such as key subcontractors and major suppliers of plant and equipment); and  ensure in each case, the warranties clearly identify what is expected of the person giving the warranty, and what will happen in the event of a breach Normally, a mix of general warranties and time-based warranties will be appropriate Takeaways for sellers (eg head contractors, subcontractors and suppliers) Where you are selling goods or services to someone else, you should seek to:  read the terms of all warranties carefully, to ensure you understand precisely what is expected of you and your potential liability in the event of a breach;  carefully consider any time-based warranties, particularly warranties with extended durations, and seek to ensure they are qualified for factors beyond your control (eg wear and tear, failure to maintain, misuse or deliberate damage, etc); and  obtain warranties from your suppliers and subcontractors, to ensure you will have back-to-back protection should it be required Warranties & Guarantees in the Building Industry https://masterspec.co.nz/Warranties Guarantees-in-the-Building-Industry/7085-1afdd700-f6584cfe-bd28-eb50957e107f/ Current and emerging legislation makes it increasingly clear that the performance of construction materials and systems and the work performed installing them must meet suitable criteria We usually refer to these criteria as either a Warranty or Guarantee and the terms are often transposed Although similar, however, they have different meanings which you must be clear on in your documentation Terminology – precision is key A Guarantee is a promise of quality & durability, with regular use, and usually applies to simple whole items, from a TV to an entire building A Warranty is a guarantee plus acceptance of liability & defect correction This is more often applied to complex systems (like construction systems that are part of a building) in particular situations over specified periods Durability means Durability to NZBC B2, which describes the specific technical performance of a material and its resistance to complete failure over a defined period subject to proper maintenance Liability describes the accountability of persons or organisations for any failure of materials, systems or construction Definitions GUARANTEE TYPES Different types of Guarantees may be applied, including Commercial warranties, Contractual warranties, Legislated guarantees and the Fair Trading Act  Commercial guarantee – provided by private enterprise (e.g MasterBuild Guarantee)  Legislated guarantee – The Consumer Guarantees Act The Act applies to residential only and is limited to the services provided (not the buildings) It covers:  o Work to be done with reasonable care and skill o Materials to be of acceptable quality & fit for purpose o Work completed in a timely way The Fair Trading Act – the Act protects consumers from being misled about products or services Refunds and compensations are available if there were any misleading claims for: o Work needed when it was unnecessary o The contractor/tradesperson purporting to belong to a trade association or implying they have some industry approval WARRANTY – TYPES Different types of Warranties may be applied, including Commercial warranties, Contractual warranties, and warranties enforced by legislation    Commercial warranties – usually from manufacturer/supplier, these may be provided: o As of right or o Required by Specification Contractual warranties – These warranties are from the contractor or subcontractor and are required as set out in the contract or specification for say: o A Contractors year weather-tightness and water-tightness warranty o Installers or applicators warranty of workmanship Legislated warranties – there are warranties required by the Building Act, under Part 4A: Consumer rights and remedies in relation to residential building work The Act; o Has implied warranties in residential contracts (builder/client) o Has remedies for breaches of implied warranties o Requires the contractor to remedy defects notified within one year of completion Masterspec System - examples of Commercial/Contractual warranties MASTERSPEC GENERAL REQUIREMENT WARRANTY COMMERCIAL WARRANTY - INSTALLER/APPLICATOR Implied warranties under the Building Act IMPLIED WARRANTIES - RESIDENTIAL BUILDING CONTRACTS  Implied warranties apply to Building Contracts or sale agreements (subject to Contracts) with on-sellers They warrant that; o The building work will be carried out competently in accordance with the contract plans, specifications and consent o Materials will be fit for purpose and to be new (unless stated otherwise) o The work will meet all legal requirements o The work will be done with reasonable care and skill and completed by the date (or within the period) specified in the contract Or, if no date or period is specified, within a reasonable time o The residence will be suitable for occupation on completion IMPLIED WARRANTIES - REMEDIES If there has been a breach in a written or verbal contract, the client may require the builder to fix the work and repair or replace defective materials If the builder does not fix within a reasonable time, the client may have work done by someone else and recover costs from the builder or can cancel the contract Where a breach of warranty is substantial or cannot be fixed, the client may get compensation from the builder for any reduction in the value of the building work below the price they paid, or they can cancel the contract  The Client may also obtain damages from the builder for any loss or damage resulting from the breach (other than loss or damage through a reduction in the value)  Builders can't contract out of their Warranty obligations The legislation applies to the work of the builder, as well as employees and subcontractors the builder is responsible for An owner of the building or land in respect of which building work was carried out under a contract to which this section applies may take proceedings (Adjudication, Arbitration, WHRS) for a breach of any of the warranties set out in section 362J, whether or not that person was a party to the contract How long does liability last? LIABILITY - LIMITATION ACT 2010 Limitation laws prevent certain legal claims being brought against a person or company after a defined period They provide a defence against old claims and give certainty to legal liability for past events There are three legislative channels to establish most construction-related liability limitations;  The New Zealand Building Act - section 393 Limitation defence – this brings in the Limitation Act for civil proceedings arising from: o Building work - design, construction, alteration, etc o Performance of a function under the Building Act o Has a ten year (long stop) time limit from the date of omission o   May include implied warranties (for residential only) Limitations Act 2010 – for building related matters the time scales generally are: o Limited to years from discovery (but extended to) o Ten year-long stop for "reasonable discoverability" (under Building Act) Weathertight Homes Resolution Services Act (WHRS): o Ten year-long stop, generally Note: These limitations don't always apply to material or product performance These can be subject to more extended performance requirements of Durability (under the Building Act, Building Code and other legislation) and specific warranty period Warranty vs Guarantee We guarantee you'll find this  interesting A warranty  is a guarantee  of the integrity of a product and of the  maker’s responsibility for it. In a sense, guarantee is the more  general term and warranty is the more specific (that is, written and  legal) term. But a closer look at these words shows a relationship that is even closer than that: they were originally one and the same Though today the words have subtly different meanings—'warranty' is more specific and 'guarantee' is more general—they were originally  the same word Though today the words have subtly different meanings—'warranty' is more specific and 'guarantee' is more general—they were originally  the same word Warranty The term 'warranty' can have a number of meanings, but in general, it refers to a legally binding assurance or promise Warranties may be used to provide assurance from one party to another that goods and/or services will meet certain expectations, e.g fit for purpose, being free from defects, complying with statutory and other regulations and specifications A warranty can be either express (i.e written) or implied A common form of warranty, and one that is paid for, is that which runs with a product, meaning that the customer of a product is given an assurance by the manufacturer that any defects or losses will be repaired or compensated during a given period The warranty can also detail both parties’ rights and obligations in the event of a dispute Defects in buildings are not recoverable in tort (only as a contractual claim), as they are economic loss which are only recoverable through a contractual relationship As a result, collateral warranties have been developed These provide for a duty of care to be extended by one of the contracting parties to a third party who is not party to the original contract A typical example is an architect of a new development agreeing to a duty of care to the occupant Privity of contract rules would prevent any liability arising between the architect and occupier without the existence of a collateral warranty For more information see: Collateral warranties Bonds and guarantees are forms of security that accompany contractual obligations and are based on either primary or secondary obligations The One-Year Warranty: Fact or Fiction? Thursday, March 22, 2018 I recently saw a commercial that trumpeted a 10-year or 100,000-mile powertrain warranty on a $14,000 car The next day, I was on the phone with a contractor who insisted that he would only guarantee his work on a multimillion-dollar building for one year How was it possible for me to get a 10-year warranty on an inexpensive car, but my client could not get a more substantial warranty on a project that was 200 times more expensive? The contractor explained that his warranty policy is “the industry standard.” But is it? The Warranty Onion: Misconceptions Based on Misreadings Many contractors (and some owners) believe that under most industry-standard construction contracts, the contractor is not responsible for correcting defective construction discovered more than one year after completion because those contracts establish a “standard, one-year warranty.” Although a contractor could certainly include language in the construction contract expressly providing for a one-year warranty, there is simply no such thing as an industry-standard, one-year warranty The likely source of this misconception is found in common construction documents, such as AIA Document A201 – 2017, General Conditions of the Contract for Construction Projects Specifically, Section 12.2.2.1 provides that: “In addition to the Contractor’s obligations under Section 3.5, if, within one year after the date of Substantial Completion of the Work or designated portion thereof … or by terms of any applicable special warranty required by the Contract Documents, any of the Work is found to be not in accordance with the requirements of the Contract Documents, the Contractor shall correct it promptly after receipt of notice from the Owner to so … During the one-year period for correction of Work, if the Owner fails to notify the Contractor and give the Contractor an opportunity to make the correction, the Owner waives the rights to require correction by the Contractor and to make a claim for breach of warranty.” This one-year correction period has become known in the construction industry as a “one-year warranty.” Both owners and contractors point to this provision as a contractual limit on the contractor’s obligation to correct defective work discovered more than one year after completion of the construction However, when this section is read in conjunction with Section 3.5.1 of A201, it is clear that the intent is not to provide a one-year limitation period Thus, while the contractor’s obligation to repair may be limited to one year, the contractor’s financial obligation to pay to correct defective work is not as limited Section 12.2.2.1 states that the one-year requirement is “in addition to the Contractor’s obligations under Section 3.5.” Thus, the obligation at Section 12.2.2.1 is in addition to and not a limitation on Section 5.5.1 Section 3.5.1, entitled “Warranty,” states: “The Contractor warrants to the Owner and Architect that materials and equipment furnished under the Contract will be of good quality and new unless the Contract Documents require or permit otherwise The Contractor further warrants that the Work will conform to the requirements of the Contract Documents and will be free from defects, except for those inherent in the quality of the Work the Contract Documents require or permit Work, materials, or equipment not conforming to these requirements may be considered defective The Contractor’s warranty excludes remedy for damage or defect caused by abuse, alterations to the Work not executed by the Contractor, improper or insufficient maintenance, improper operation, or normal wear and tear and normal usage.” It is important to note there is no language in Section 3.5.1 that establishes any sort of limitation period Further, Section 12.2.5 states: “Nothing contained in this Section 12.2 shall be construed to establish a period of limitation with respect to other obligations the Contractor has under the Contract Documents Establishment of the one-year period for correction of Work as described in Section 12.2.2 relates only to the specific obligation of the Contractor to correct the Work, and has no relationship to the time within which the obligation to comply with the Contract Documents may be sought to be enforced, nor to the time within which proceedings may be commenced to establish the Contractor’s liability with respect to the Contractor’s obligations other than specifically to correct the Work.” As a result, the contractor’s warranty obligations set forth in Section 3.5.1 are not limited by any contractual timeframe Rather, under Illinois law, a claim for breach of construction warranty may be brought if discovered within 10 years after the time the act or omission occurred, which would be no later than completion of the construction unless otherwise specified That means a claim for defective work under Section 3.5.1 can be brought at any point during that timeframe, regardless of the “one-year” language contained in Section 12.2.2.1 If the construction contract contains express language limiting the contractor’s obligations to the one-year period after the completion of the project, then that provision will be a defense for the contractor against an owner asserting a claim outside of that one-year period However, if the construction contract incorporates an unmodified version of A201, the applicable warranty will not be limited to one year Know Your Contract Language (and What It Means for You) It is important for the contractor, and ultimately the owner, to be aware that concern over how long the warranty runs does not necessarily end with the owner-contractor agreement The parties also need to consider the language in the contractor’s subcontract Most contractors use the same subcontract form from project to project, and generally those subcontracts contain language that binds the subcontractor to a one-year warranty In essence, while the contractor may be providing the owner with a longer warranty, the subcontractor might not be Unless the subcontract states that the owner-contractor agreement has priority over the subcontract (e.g., “in the event of conflict the terms of the Prime Contract will govern and control”), the contractor may be obligated to the owner to correct defective subcontractor work without the subcontractor having any responsibility for the performance of the corrective work Home > Blog > What's The Difference Between Guarantee and Warranty? What's The Difference Between Guarantee and Warranty? IamCheated.com Research Team | February 07, 2018 8:07:pm Difference between Guarantee and Warranty You will come across two words, warranty and guarantee when you purchase new products Guarantee and Warranty protect consumer rights, as they provide solutions in case the product purchased is faulty When you purchase a product, the buyer will promise you many things However, if the product is defective, you will lose all your money This is where warranty and guarantee will help you It will ensure that the product is fixed or replaced if there are problems People are often confused between guarantee and warranty As a customer, before buying a product in traditional/online mode, you should know the difference between guaranty and warranty, to avoid getting cheated What is Guarantee? Guarantee is a commitment made by the manufacturer to the buyer Just like a guarantor stands behind a loan, the manufacturer stands behind the product If a product under guarantee is of low quality, it will be either repaired/replaced, or the money paid will be refunded to the buyer What is Warranty? Warranty is an assurance given by the manufacturers to buyers, that if the product breaks or if there is any problem with the product, the manufacturer will repair the product for free But, the manufacturer will not replace the product For instance: If your straightening machine stops working suddenly and is covered under a months warranty and it has been only months since the purchase, you can take it to the service centre and get it repaired for free If your product is not covered under the warranty, then you will have to pay and get it repaired The guarantee covers products and services, whereas warranty covers only products In case of a guarantee, refund of the amount is possible, if stated But, refund of the amount is not possible in case of warranty Example of product not covered by warranty: Let’s say you have bought a tablet which is under warranty for months After months if the tablet slips from your hand and the screen breaks, this is not covered under warranty You need to pay and get the screen replaced After the completion of the warranty period, you can extend it by paying an additional amount But, in case of guarantee after the completion of the guarantee period, additional guarantee cover is quite rare Guarantees can either be in oral or written form, but it is very hard to prove oral guarantees Warranty will usually be in written form, so it can easily be proven Refund of money paid is not possible in case of a Warranty On the other hand, refunds can be given in guarantees or the product will be replaced Have a complaint against any company? IndianMoney.com's complaint portal Iamcheated.com can help you resolve the issue Just visit IamCheated.com and lodge your complaint What is warranty? To understand the difference between warranty and guarantee, let us understand Warranty first To state it simply, Warranty means a commitment from a manufacturer to its customers that if the product breaks or if there is any problem in the product, the manufacturer will provide free repair for the product But the manufacturer does not commit replacement He commits only repair This basically means that the customer is protected against sudden breakage or sudden problems in the product If you bought a costly Refrigerator today, and it stops working one month down the line, why would you pay for the repairs? There should be a minimum time frame when the company is responsible for the product to work Companies therefore provide warranties with their product as a sign of assurance that the company is invested in the well being of the product In other sense, if a company does not provide warranty for the product, then the company is not confident about the quality of the product or the liability lies with the consumer Example of Products covered under warranty – Your smartphone suddenly starts behaving weird Some icons are not clicking even though you are pointing at them As the phone is covered under months warranty and it has been only a month since the purchase, you take the phone to the service center and they repair it for free No charges applicable Example of product not covered by warranty – Continuing the above example, after months, the phone slips from your hand one day and you break the screen Now this is not covered under warranty so you will have to pay for the screen to be replaced It is the owner who is liable in such cases Example of product not covered by warranty – Continuing the above example, after months, the phone slips from your hand one day and you break the screen Now this is not covered under warranty so you will have to pay for the screen to be replaced It is the owner who is liable in such cases Companies look at their own products before committing a time frame for warranty to be applicable If a company which manufactures goods is sure that their product will last at least 1-2 years without need of any service, then they are most likely to give a warranty on that product What is Guarantee? Guarantee is a step ahead of warranty wherein the company is so confident of their product, that they offer repair or replacement of the product In short, if there is any problem in the product, the company will first try to repair the product and then if not repaired, it will offer free replacement When Amazon Kindle was launched, it was a completely new concept in the market and there was a year guarantee on the product Kindle was known to have a soft screen and its screen breaking was a problem However, Kindle knew what percentage of their customers will suffer from this problem Due to the guarantee in place, many customers got direct replacement of their Amazon Kindle therefore motivating more people to adopt the Kindle faster Companies like Cross pens or Mont Blanc have lifetime guarantee of their products They are so confident about their products, that if anything happens to the product which is not resolved by the company, they offer free replacement to the end customer Off course these companies have to factor in the margins for the replacement so that they are in profit at the end But the cost of guarantee commitment is a different issue altogether Difference between warranty and guarantee WARRANTY GUARANTEE Warranty means repair but no Guarantee means repair or if repair not commitment on replacement of the possible then replacement product Warranty is generally given for Guarantees are given for products which are products which are known to have sturdy and robust and are unlikely to break frequent breakdows and are down easily Although guarantees are also mechanical in nature - Example given for mechanical product, the mechanical washing machines product should be high value or highly engineered Example of products - Premium Pens, Heavy engineering products Refunds are not given in Warranty Refunds can be given in guarantee or a replacement is made WARRANTY GUARANTEE Warranty is covered for certain parts Guarantee is completely free of cost but there may be parts out of Guarantee may cover only certain parts Other warranty for which payments need to parts of a product might be under warranty be made After warranty, the warranty can After guarantee period, additional guarantee be extended with additional cover is very rare Additional warranty might payment be given It is written and warranty cards are Guarantee is a written document and used to confirm date of purchase generally Guarantee cards are used for the contract Guarantee is valid from the date of purchase to the last date of guarantee Example - Air conditioners might be Example - Cross pens are covered by under year warranty and hence guarantee and if there is ever a problem with repair of air conditioners will be done the pen, it is either repaired or completely free of cost replaced As you can see from above, The difference between Warranty and guarantee also stands as differences in legal propositions While a customer can claim repair of the product for free, he cannot claim the replacement of the product because the company is not legally obligated for a guarantee / replacement ... visit IamCheated.com and lodge your complaint What is warranty? To understand the difference between warranty and guarantee, let us understand Warranty first To state it simply, Warranty means a... Between Guarantee and Warranty? What's The Difference Between Guarantee and Warranty? IamCheated.com Research Team | February 07, 2018 8:07:pm Difference between Guarantee and Warranty You will... Building Code and other legislation) and specific warranty period Warranty vs Guarantee We guarantee you'll find this  interesting A? ?warranty  is a guarantee  of the integrity of a product? ?and? ?of the 
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