If you’re a seller of products or services, the term "warranty" holds significant weight. It acts as a safeguard for both buyers and sellers. Understanding the legal meaning of the term is important for small businesses aiming to provide quality products and services.
In this comprehensive guide, we’ll explore the fundamental aspects of warranties. This includes how they work, how they differ from guarantees and how you can deal with customer disputes.
What is a warranty?
A warranty is a promise made by a manufacturer or seller concerning the condition of their product or service. It assures buyers that the product or service will function as originally described or intended. If issues arise, the company will offer repairs, refunds, or exchanges as per the terms outlined in the policy.
Essentially, warranties offer buyers assurance that the goods and services they purchase meet the agreed standards.
How does a warranty work?
Warranties function as promises made by manufacturers or sellers regarding their products and services. The warranties can be either explicit or implied, providing a contractual remedy about the goods and services.
Typically, warranties are valid for a specified period. After this passes, the issuing entity is no longer obligated to address issues related to the product or service. Warranty terms also often have exceptions, limiting the conditions under which repairs or replacements are obligated.
Types of warranties
In most cases, warranties fall into two categories, either express or implied. There are also extended warranties, which we’ll explore in more detail.
1. Express warranty
An express warranty is a straightforward commitment from a seller or manufacturer. It confirms that the purchased product or service will perform according to specified specifications. It can be conveyed through written documentation, verbal communication, or advertising. It can also be considered a legal warranty.
2. Implied warranty
Implied warranties, specifically the implied warranty of merchantability, guarantee that the purchased product functions as designed. This warranty is not explicitly expressed but is assumed unless explicitly excluded, as seen in "as is" sales. Implied warranties can be set out in statute.
3. Extended warranty
Extended warranties are additional coverage plans. These are often purchased by customers to extend protection beyond the manufacturer or seller’s warranty. They are essentially insurance policies for products, providing extended terms and conditions. It is possible to set these up for years, or even the lifetime of the product.
What is a breach of warranty?
A breach of warranty refers to a failure to fulfill the terms and conditions of a warranty. When a breach of warranty occurs, it means that the product or service did not meet the standards promised or expected. This breach can take various forms, such as defects in materials or workmanship. It could simply fail to perform as advertised.
Consumers who experience a breach of warranty have the legal right to seek remedies. These are usually repairs, replacements, or refunds. This depends on the nature of the warranty and applicable consumer protection laws.
How long does a warranty last?
The duration of a warranty varies based on the type of product and service, and the terms of the warranty. Many warranties for common household items typically last up to one year from the date of purchase. After this period, the manufacturer is no longer obligated, unless an extended warranty has been purchased. Home warranties, specifically for appliances and systems, may provide coverage for an extended period.
What is the difference between warranty and guarantee?
While the terms "warranty" and "guarantee" are often used in place of each other, there are key differences. Both involve promises made by sellers regarding their products. The distinction lies in the level of confidence regarding the product's quality and functionality.
- A warranty is a commitment from a seller that if the product or service fails to meet certain specifications, a solution is available
- It outlines the conditions in which the seller is liable and specifies exclusions
- The cost of the warranty is typically included in the product's price
- A guarantee is an assurance from the manufacturer or seller that the product/service will work as described or meet specific quality standards
- Guarantees are offered at no cost to the buyer and can cover both products and services
Understanding these differences is imporant for businesses to communicate effectively with customers and manage expectations. It also helps them to understand their liability when issuing warranties or guarantees.
Do I have to offer a warranty to my customers?
UK law implies several important terms into all sale of goods contracts to protect purchasers. These terms can apply to both businesses and consumers. It is unlawful to exclude implied terms from UK contracts with consumers. However, it's possible to exclude or limit implied terms in business-to-business contracts.
There is no legal requirement for businesses to offer warranties in the UK (in addition to the implied terms). However, providing warranties can build trust and confidence. It's a proactive measure that signals a commitment to product quality and customer satisfaction.
When would a warranty be denied?
There are situations where warranty claims may be denied by the seller or manufacturer. The exact terms will be set out in the terms and conditions or extended warranty wording. These scenarios can include:
- Altered products – warranties typically apply to products that have not been altered or modified after purchase (changes to the product can nullify warranty coverage for affected components)
- Owner actions – if a product failure is due to the owner's actions, the warranty may not be honoured (extreme environmental conditions or misuse can also have an impact)
Are warranties enforceable?
Warranties are legally enforceable documents. Buyers have the right to seek remedies outlined in the warranty terms if they meet the conditions required. However, enforcement requires careful following of the procedures specified in the warranty.
How companies can resolve warranty disputes
Resolving warranty disputes is a critical aspect of maintaining customer satisfaction and protecting a business's reputation. When faced with warranty-related issues, businesses can follow a structured approach to address and resolve disputes effectively.
1. Understand the customer's concern
When a customer raises a warranty concern, you should actively listen to their issue, understand the specifics of the problem, gather relevant details, and empathise with their situation.
2. Refer to warranty terms
Review warranty documentation
Examine the terms and conditions outlined in the warranty documentation. Clearly understand what the warranty covers, the duration of coverage and any conditions or limitations. Be familiar with the scope of the warranty.
3. Verify proof of purchase and registration
Verify that the customer has provided proof of purchase and, if applicable, has registered the product for warranty coverage.
4. Communicate transparently
Provide the customer with a clear and transparent explanation of how the warranty applies to their situation. Explain whether the issue falls within the warranty coverage and the steps that will be taken to resolve it.
5. Offer remedies within warranty terms
Repair, replace or refund
If the issue is within the warranty coverage, offer remedies outlined in the warranty terms. This might involve repairing the product, replacing it, or providing a refund, depending on the nature of the problem.
6. Provide timely responses
Respond to warranty claims promptly, acknowledging the customer's concern. Even if a resolution takes time, keeping the customer informed and demonstrating responsiveness is crucial for customer satisfaction.
7. Facilitate easy claims process
Ensure that the claims process is straightforward for customers to navigate. Clearly communicate the steps they need to follow and any documentation required to support their claim.
8.Seek customer feedback
After resolving the warranty dispute, seek feedback from the customer. Use this information to identify areas for improvement.
9. Document everything
Document all interactions, including communication with the customer, details of the warranty claim and the resolution offered. Comprehensive records are valuable for internal audits and can serve as a reference for future disputes.
10. Consider alternative resolutions
In cases where the warranty may not explicitly cover the issue, consider negotiating with the customer. Offering alternative solutions or compromises can help maintain a positive customer relationship.
11. Legal consultation if necessary
Seek legal advice
If a warranty dispute becomes complex or legal implications arise, consider seeking legal advice.
Get legal assistance from LawBite
Developing clear warranty terms and handling claims promptly can help companies build trust in their products and services. If you're concerned about warranty obligations or want to ensure your terms and conditions are legally compliant, book a free 15-minute consultation with one of our expert lawyers or call us on 020 3808 8314.