The Exciting World of Warranty Terms

Here’s a short list of terms related to warranty management. Often is the words we use that matter and understanding the language of warranties is one step in mastering warranty management.

Warranty

A promise made to the buyer of an item that the manufacturer (seller) will repair or replace the item if necessary within a specific time period.

Implied Warranty

With oral or written sales contracts there is a guarantee that the item sold is fit for it’s intended purpose at the time of sale.

Full Warranty

If the following five statements are true about a warranty’s terms and conditions, it is a full warranty:

You do not limit the duration of implied warranties.
You provide warranty service to anyone who owns the product during the warranty period; that is, you do not limit coverage to first purchasers.
You provide warranty service free of charge, including such costs as returning the product or removing and reinstalling the product when necessary.
You provide, at the consumer’s choice, either a replacement or a full refund if, after a reasonable number of tries, you are unable to repair the product.
You do not require consumers to perform any duty as a precondition for receiving service, except notifying you that service is needed unless you can demonstrate that the duty is reasonable.

United States Federal Trade Commission (FTC) https://www.ftc.gov/tips-advice/business-center/guidance/businesspersons-guide-federal-warranty-law#titling viewed 11/1/2015.

Limited Warranty

If any of the above five statements under the Full Warranty definition are false, then it is a limited warranty.

Mixed Warranty

A warranty that may have portions of a system covered by a limited warranty and other elements of the system covered by a full warranty.

For example, a passenger vehicle may have a full coverage for the engine and drive train, and limited warranty for everything else.

Express warranty

A written warranty that may be full, limited or mixed. Under the US Magnuson-Moss Warranty Act, consumer products sold for over $15 require an express warranty.

United States Federal Trade Commission (FTC) https://www.ftc.gov/tips-advice/business-center/guidance/businesspersons-guide-federal-warranty-law#Magnuson-Moss viewed 11/1/2015.

Extended Warranty

A service agreement, contract or agreement (not really a warranty) that extends or augments all or elements of an item’s original warranty.

An extended warranty may be offered by the retailer, manufacturer, or a 3^rd party (warranty administrator or service company).

As-is Warranty

A term to disclaim some implied warranty. It means the seller or manufacturer does not provide a warranty for the item being sold. The buyer pays the cost of repair or replacement under this agreement.

Tie-In Sales Provisions

Generally not allowed under the Magnuson-Moss Warranty Act for consumer goods. A tie-in sales provision requires a consumer to buy an item or service from a specific company to keep the warranty coverage.

Deceptive Warranty

Obviously, warranties must not contain deceptive or misleading terms.

You cannot offer a warranty that appears to provide coverage but, in fact, provides none. For example, a warranty covering only “moving parts” on an electronic product that has no moving parts would be deceptive and unlawful. Similarly, a warranty that promised service that the warrantor had no intention of providing or could not provide would be deceptive and unlawful.