Service contracts, unlike warranties, are purchased separately from a product. A service contract is an optional agreement for product service that customers sometimes buy. It provides additional protection beyond what the warranty offers on the product. Service contracts are similar to warranties in that both concern service for a product. However, there are differences between warranties and service contracts.
Warranties come with a product and are included in the purchase price.
They are separate either because they are made some time after the sale of the product, or because they cost the customer a fee beyond the purchase price of the product. The Act includes very broad provisions governing service contracts that are explained in the following sections. If you offer a service contract, the Act requires you to list conspicuously all terms and conditions in simple and readily understood language. In fact, using warranty disclosures in service contracts could confuse customers about whether the agreement is a warranty or a service contract. The company that makes the service contract is responsible for ensuring that the terms and conditions are disclosed as required by law.