If you've ever bought a computer, a refrigerator, or a set of power tools, you've likely come into contact with a product warranty. Basically, a product warranty is a written statement that says the seller will repair, replace, or refund the purchase if something goes wrong during a specific time period.
There are just as many different types of warranties as there are products out there.
Some warranties last for the entire lifetime of the product, while others are only good for a year. Some warranties will cover any type of damage or malfunction, while others are very specific about the issues they're responsible for. For example, the warranty on your cell phone may be null and void if you drop the phone into your swimming pool and it stops working.
Adding to the variety, there are also full product warranties and limited product warranties.
As the names suggest, a full product warranty will cover the entire cost of the repair, replacement, or refund, while a limited warranty will only pay for repairs, replacements, or refunds under certain situations.
For example, a car can come with a limited warranty that lasts for five years OR until the car has 100,000 miles on it. If it only takes you three years to rack up 100,000 miles, your warranty will end after those three years. Or, if it takes you ten years to drive the car 100,000 miles, it will only be under warranty for the first five.
A product warranty disclaimer is the seller's way of limiting legal liability if something goes wrong. It's a formal statement that the seller is officially disclaiming warranties that would otherwise apply to their product.
Some of these disclaimers are very specific, while others are more general.
Sensata's warranty disclaimer for its sample program is a great example of a general warranty disclaimer:
It's very clear that Sensata has "no obligation" to cover the costs of repairs or replacements.
On the other hand, take a look at this product warranty disclaimer from Edgemate. It's got some specific instructions in it that are much more in-depth than what Sensata has:
Edgemate makes it clear that the only thing they're offering a warranty for is the quality of the product. They refuse to take responsibility for anything that may go wrong during the application or processing of their products. They even take things a step further by requiring customers who claim that their product is defective to either send evidence of the defect or hand the product over to Edgemate so that they can inspect it. If they deem the product to be defective, they'll foot the bill for the replacement value, but anything that happens after that is not their responsibility.
That depends on where you call home.
In the US there is no law that requires sellers to offer a product warranty. However, if you want to have a product warranty disclaimer in place, there are certain legal obligations that you have to adhere to.
The Magnuson-Moss Warranty Act was created in 1975 to prevent sellers from using product warranty disclaimers in a misleading or unfair way. Now, product warranty disclaimers have to be written in a way that's easy for the average consumer to understand, and the Federal Trade Commission (FTC) has the power to punish sellers who violate this law.
Under this law, sellers cannot disclaim an implied product warranty. Simply put, an implied warranty is a set of assumptions and assurances that are made when the buyer purchases the product.
For example, if you buy a car, it's implied that the car actually runs. Or, if you buy a steak, it's implied that the steak is actually edible. If you put a disclaimer on the car's sales agreement that says you're not responsible if the car doesn't start when the new owner tries to drive it off the lot, you're violating federal law.
Just because you don't put any implied warranties in writing doesn't mean you're not responsible for them. The Magnuson-Moss Warranty Act says that implied warranties exist whether or not the seller writes them down.
What happens if you violate the Magnuson-Moss Warranty Act?
The Act itself has made it easier for consumers to take sellers to court for breach of warranty. Also, the Act urges sellers to use more informal methods of resolution instead of going straight to an expensive legal proceeding. Most of the cases related to product warranty disclaimers are hashed out in state court, but if a number of buyers claim that you've breached your legal warranty duties, they can file a class action lawsuit against you in federal court.
What if you're a manufacturer that distributes your products to other sellers?
In the legal world, the people that you're selling or distributing to are called "intermediate sellers." These sellers buy the products from you then put them in their store and sell them to buyers.
When it comes to product warranty disclaimers in this situation, there are three questions you need answers to:
In the US, if an intermediate seller has a product warranty disclaimer in place, it likely doesn't extend to you.
However, there are some exceptions:
Bottom line -- don't rely on your intermediate sellers.
If you want to have product warranty disclaimers in place, create them yourself. Also, do everything you can to ensure that your intermediate sellers disclaim the product's warranties AND include you in the disclaimer when they sell it to the end buyer.
In the UK, British law mentions implied warranties, too, but the way that they're handled is slightly different from the way that US law deals with them.
In the UK, implied product warranties have the same definition as their US counterparts. However, in the UK, you ARE allowed to put a disclaimer on an implied warranty.
In fact, legal experts in the UK strongly suggest that your product warranty disclaimer specifically addresses implied warranties AND implied conditions. Otherwise, it could be a loophole for buyers to take legal action against you.
What's an implied condition?
It's an assumption that the buyer makes, not just for the immediate use of the product but also for the product's use in the future.
For example, a British oil company sold and delivered oil to the buyer's ship. While the oil met all of the necessary specifications at the time of delivery, by the time the oil made it to its final destination, it no longer met those standards.
The buyer argued that there was an implied condition that the oil would maintain its standards long enough to be shipped to its destination. The seller argued that the buyer had no legal recourse because it had a product warranty disclaimer. Since the oil was perfectly fine when it was delivered, the seller said it wasn't liable for anything that may have happened afterwards.
Unfortunately for the seller, a British judge did not agree. He ruled that it was up to the seller to disclaim implied warranties AND implied conditions, and the buyer received a judgement of more than $3 million.
Implied warranties are also a part of Canadian law, although exactly how they're dealt with can vary from province to province.
Generally, Canadian product warranty disclaimers cannot erase liability for implied warranties. You can disclaim some product warranties by selling items "as is," but even as is products still come with assumptions that they're going to perform a certain way.
However, the warranty process is different for consumers in New Brunswick. There, buyers are protected by the Consumer Product Warranty and Liability Act (CPWALA).
According to this law, consumers have a right to purchase new and used goods that are defect-free and that meet reasonable expectations. Under CPWALA, product warranty disclaimers are null and void because the law says that a consumer will not lose his CPWALA rights, even if he signs a disclaimer.
CPWALA also protects business buyers who purchase goods from a manufacturer or distributor before turning around and reselling them.
All Canadian consumers are protected by the Competition Act, which allows sellers to be fined if their product warranty disclaimers are found to be misleading. Individuals who violate this Act face a fine up to $750,000 for their first offense, followed by a $1 million limit after that. Violating corporations can be fined up to $10 million for their first offense and up to $15 million after that.
Consumers in Australia have the protection of the Australian Consumer Law (ACL). For starters, guarantees apply to certain products, regardless of whether the seller has offered a warranty or not. These guarantees include getting a product that matches the description of the sample model and getting a product that is of acceptable quality and fit for its intended purpose.
On products where there is a warranty, sellers have strict requirements to meet if they want to comply with the ACL.
For example, the warranty MUST include the following statement:"Our goods come with guarantees that cannot be excluded under the Australia Consumer Law."
Also, the warranty information you put on the packaging of your product must be consistent with the fine print that's included inside the package. You must also list all of the things that a buyer needs to do in order to reap the benefits of the warranty.
If you're creating a product warranty disclaimer, you cannot disclaim any of the rights, guarantees, implied warranties, or implied conditions that are part of the ACL.
A quick Google search will pull up several websites that have product warranty disclaimer templates that are free to download and easy to use.
Now that you're armed with knowledge, go create product warranty disclaimers that can help protect you AND keep you compliant with the law.