Warranty

By Entrepreneur Staff

Warranty Definition:

A seller's assurance to a purchaser that the goods or services being purchased are or shall be as represented and, if not, will be replaced or repaired

Warranties for your goods and services can be either express or implied. Express warranties are those made in writing or directly given by you to your customer or client. Examples of express warranties are "Parts and labor warranted for 90 days on moving parts."

Implied warranties aren't expressly stated but can be derived from advertisements and literature. Examples are "You'll never have to paint again if you use this product" or "Use this rust-free compound to save time and money." The implication is that no rust will form on the item and that you'll never have to redo your project.

From a business owner's point of view, it's important to make sure that the person writing your advertising or brochures doesn't inadvertently give a warranty that you can't pay for. Breaches of warranties usually mean that you have to give the cost of the product back or at least replace or repair it. This can be very costly.

And when it comes to a written contract between your business and a customer, depending on the contract, you almost certainly will want to include some representation and warranties, and warranty waivers. There are many variations on warranties depending on the type of transaction. Typically, warranty waiver language will waive the following warranties usually implied into sales of goods under state law:

Merchantability. This warranty means the product will operate as it's expected to. For example, a toaster will toast bread.

Fitness for a particular purpose. This warranty means the item will work for something in particular. For example, if you're seeking fishing line that holds 1,000 pounds, then the product information should state that it will hold that amount.

Noninfringement. This kind of warranty relates primarily to intellectual property matters. Basically, it means that the items contain only original work or that the creator has obtained all the necessary licenses so that no third party's rights will be infringed.

Title. This warranty means the seller has good title to the item.

More From Legal Issues

Fair Labor Standards Act

A federal law enforcing minimum standards that employers must abide by when hiring employees

Family Medical Leave Act (FMLA)

The 1993 law that entitles a covered employee to take up to 12 weeks of leave in a 12-month period for the birth or adoption of a child or the serious health condition of the employee or the employee's child, spouse or parent

Contracts

A legal document between parties that clearly spells out just what is expected and required of each party

Americans With Disabilities Act (ADA)

A federal law enacted in 1990 that makes it illegal for employers with 15 or more employees to refuse to hire qualified people with disabilities if making "reasonable accommodations" would enable the person to carry out the duties of the job