Warranties

A warranty is a guarantee by a seller or manufacturer that a good will work as designed, advertised, and explicitly or implicitly promised, and that it will do so [Page 1703]for a particular period of time. In conventional usage in North America, “warranty” usually refers specifically to a repair, replace, or refund guarantee, built into the cost of the product; when such a warranty is extended for an additional fee, it will often cover such circumstances as are beyond the fault of the manufacturer, including repairs necessitated by consumers' errors. From an accounting perspective, a warranty is a contingent liability: an expense that might be paid; companies usually have a good sense of what each warranty costs them, when averaged out.

Express Warranties

Express warranties are those that are explicitly spelled out, whether extended or otherwise. They explain the terms under which they are honored: the conditions under which a return can be made, the period of time during which a return can be made, and the process and results of return. Depending on the warranty and the reason for the return, returned items may be exchanged for a working copy of the product, repaired, or refunded wholly or in part. Some items can be returned to the store, where they were purchased, others must be returned to the manufacturer. Generally a warranty can be expected to cover defects of manufacture and damage incurred in transit or in the store. Warranties generally do not cover consumer disappointment, which seems obvious, but the line between a defective product and a disappointing one can be narrow. An impressive knife advertised on television and shown cutting tin cans in half is defective if it arrives with the blade nicked or the handle broken; if it arrives, is put to use, and cuts a tin can in half but is useless thereafter, it's only disappointing.

In American law, certain types of statements in advertising and promotional materials are protected from being read as express warranty—the legal term is puffery. Improvable superlatives or subjective truths are puffery—if a candy bar is not “the world's best” candy bar or a consumer dislikes the soft drink that the advertisement said taste tests favored, the company is not bound to grant a refund. Statements made as testimonials fall under the umbrella of puffery as well, as do portrayals of a product having clearly impossible effects: such as deodorant spray causing women to chase its users down the street. The claims that must be substantiated, and which count as express warranty, are those that could be proven quantifiably. A disposable razor with “the most blades of any razor in the world” must indeed have more than its competitors, and “the most caffeinated soft drink” must have the federal maximum amount of caffeine per ounce. Legal departments in companies or their advertising agencies often examine the wording of any advertisements to keep their ducks in a row.

Implied Warranties

Implied warranties are those assurances that can be “taken as a given” even when they are not spelled out. In most countries this includes the warranty of fitness for a particular purpose and the warranty of merchantability, which are very similar: the principle of both is that, whether the seller says anything about the product or not, the buyer is reasonable to assume that a product by its nature is appropriate for some certain end.

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