warranties

Warranties - Sales of Goods


Clever Content

  • What is a warranty?
  • What are the two types of warranty?
    • Express warranty
    • Implied warranty
  • The Magnuson-Moss Warranty Act.

What is a warranty?

A warranty is a type of guarantee that a manufacturer makes about the quality and condition of its product.

It gives the details for repairs or exchanges if the condition does not meet expectations or does not function as originally described or intended.


What are the types of warranty?

There are two main types of warranty:

  • Express Warranty
  • Implied Warranty.

Express Warranty

This is where a seller makes a promise about the product or service they are providing.

'An express warranty is an agreement by a seller to provide repairs or a replacement for a faulty product, component or service within a specified time period. Under the federal Magnuson-Moss Warranty Act, a company must provide a written express warranty if a product is sold for more than $15'. Investopedia.com

An express warranty is created when a seller makes a guarantee to the buyer that the product/service being offered has certain qualities. The promise may be made in writing or orally.

The warranty should include:

  • A description of a service or item
  • Factual statements about the service or item
  • How the consumer can contact the manufacturer regarding repair or replacement
  • Time periods and limits
  • Packaging and shipping instructions
  • How long it will take for the return of the repair or replaced product.

Implied Warranty

These are governed by state laws. The law imposes a warranty regardless of the seller’s actions. Almost every purchase is covered by an implied warranty.

There are three major subtypes of implied warranty, these are the implied warranty of:

Merchantability (only given by merchants)

This is a guarantee that the goods conform to ordinary standards of care and use that they were intended for and that the goods or services are of the same average grade, quality, and value as similar goods sold under similar circumstances.

Fitness for a particular purpose

An implied warranty of fitness occurs when a buyer requests something for a particular purpose, and the seller then supplies a product for that purpose. The goods must be suitable for the buyer’s purpose.

E.G. Asking a watch seller for a watch for diving. There is an implied guarantee that the watch will be waterproof.

Title

This guarantees that the seller has the legal right to transfer the goods and the goods will be free from any other burdens that the buyer was not aware of at the time of contracting. It is generally included with every sale unless it is effectively disclaimed.


The Magnuson-Moss Warranty Act

In the United States, under the 1975 Magnuson-Moss Warranty Act, the seller must provide a written, express warranty, that the product will be as demonstrated by the company.

Any product costing over US$15 must be provided with detailed information about warranty coverage.

This Act  gives warranty protection to consumers and provides useful remedies for enforcement. It also helps to improve the overall reliability of products by providing a legal process if products are not made to an acceptable standard.

Warranties must include the following information:

  • Who can enforce the warranty
  • What the warranty covers
  • How to obtain warranty services
  • Limits on warranty
  • Information about a consumer’s legal rights.

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Posted in Business Law, Business Law - Introduction, Sales of goods.