Warranties

A warranty is a specific type of contract that involves a promise that goods or services sold will meet certain standards. A contractual obligation and associated legal liability is created when a manufacturer or seller provides a warranty and a buyer relies on the warranty in making their purchase decision. A warranty can be either in writing or oral. Warranties are offered for a range of different goods and services, from manufactured goods to real estate to plumbing services. The warranty assures the buyer that the good or service is free from defects. In case the product or service fails to meet the standards set out in the warranty, then the contract provides a specific remedy, such as a replacement or repair.

Express Warranties

Express warranties are specific statements of fact or promises about a product by the seller. This form of warranty is considered part of the sales transaction that influences the buyer. Express warranties appear in the form of statements that can be interpreted as fact:

• Wrinkle-free shirt
• Lifetime guarantee
• Made in the USA
• Orange juice not from concentrate

There is not a specific way that words must be stated to make an express warranty valid. Importantly, the sales contract does not need to explicitly state that a warranty is being intended. It is enough that the seller states facts about the goods that the buyer relies on. However, the courts do apply a reasonableness test of reliance upon warranties. Puffery, or exaggerated language used to increase sales, is lawful, and the consumer is required to apply reason when evaluating such statements. For example, buyers are expected to use reason when judging seller makes claims such as “this sandwich is the best in the world.” Obvious sales talk cannot ordinarily be treated as a legally binding warranty.

Implied Warranties

Implied warranties are neither written nor oral. These guarantees are imposed on sales transactions by statute or court decision. They promise that the product will perform up to expected standards. For example, a man bought a used car from a dealer, and the next day the transmission fell out as he was driving on the highway. The dealer fixed the car, but a week later the brakes failed. The man sued the car dealer. The court ruled in favor of the car owner because any car without a working transmission or brakes is not fit for the ordinary purpose of driving. Similarly, if a customer asks to buy a copier to handle 5,000 copies per month, they rely on the salesperson to steer them to a copier that meets those needs. The salesperson implicitly warrants that the copier purchased is appropriate for that volume.