# Warranty Definition, How It Works, Types, and Example

![Warranty](https://www.investopedia.com/thmb/kICs4zOKrlNJvSSuXNVzdsIglCc=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/warranty.asp_Final-973893a9eed14b4faae57c56a8ce2c6c.jpg)

*— Investopedia / Candra Huff*

## What Is a Warranty?

A warranty is a guarantee or promise from a manufacturer or seller about the condition and quality of their product. It outlines the terms under which repairs, [refunds](https://www.investopedia.com/terms/r/refund.asp), or exchanges will be made if a product fails to perform as intended. Warranties provide consumers with assurance that the goods they purchase are as advertised, offering a structured recourse should issues arise. This article explores the mechanics of warranties, the distinctions between express and implied warranties, and key consumer protection laws like the Magnuson-Moss Warranty Act that safeguard buyers from false claims and misrepresentations.

### Key Takeaways

*   A warranty is a promise by a manufacturer or seller to repair or replace a product if it fails to meet specific conditions, offering reassurance to consumers.
*   The Magnuson-Moss Warranty Act of 1975 requires clear disclosure of warranty terms, aiming to protect consumers from deceptive practices.
*   There are two main types of warranties: express warranties, which are explicitly stated, and implied warranties, which guarantee a product’s merchantability without needing to be explicitly mentioned.
*   Manufacturers often provide limited warranties, prompting some consumers to purchase extended warranties for additional protection.
*   In certain cases, altered products or misuse by the owner can void a warranty, meaning manufacturers won't honor claims for those products.

## Understanding the Mechanics of Warranties

As noted above, warranties are promises made by manufacturers or retailers about their products and services. These promises can be either explicit or implied. Warranties provide a guarantee about the condition of goods and services purchased, providing an assurance that they are as advertised. They are generally only good for a specified period. When that period ends, the issuing entity is no longer obligated to repair or replace a product previously covered.

Warranties typically include exceptions that limit when a manufacturer must fix a problem. Many warranties for household items cover the product only for a year from purchase. They usually cover issues caused by defective parts or workmanship.

As a result of these limited manufacturer warranties, many [vendors](https://www.investopedia.com/terms/v/vendor.asp) offer extended warranties. [Extended warranties](https://www.investopedia.com/extended-warranties-not-worth-your-money-11679616) are like insurance that consumers pay for in advance. Coverage often extends several years beyond the manufacturer's warranty and is generally more lenient.

[Home warranties](https://www.investopedia.com/the-best-home-warranties-11690942) offer discounted repair and replacement for appliances, with plans depending on the coverage you choose.

## Key Legal Aspects of Warranties

The U.S. Congress passed the Magnuson-Moss Warranty Act of 1975 to set standards and rules for consumer product warranties to protect consumers from fraud and misrepresentations.

The act stipulates that the terms and conditions of warranties must be fully and clearly disclosed to the buyer before purchase, including whether it is a full or limited warranty. It also prohibits deceptive practices, such as the inclusion of misleading or false terms or requiring the buyer to purchase another product to validate the warranty.

In addition to what the manufacturer guarantees in an express warranty, the [Uniform Commercial Code (UCC)](https://www.investopedia.com/terms/u/uniform-commercial-code.asp) provides additional consumer protection by providing the implied warranty of merchantability. This warranty guarantees remedy if the product fails to perform as designed.

> **Fast Fact**
>
> Warranty terms can vary from free repairs on the defective product to complete replacement. The owner may be instructed to bring the product to the nearest authorized repairman, the seller, or ship it to the manufacturer.

## Types of Warranties

There are two general types of warranties, expressed and implied. Each category has different sub-types of warranties, with terms, conditions, and guarantees.

### Express Warranty

As its name suggests, an [express warranty](https://www.investopedia.com/terms/e/express-warranty.asp) is an expressed guarantee from a seller or manufacturer to a buyer that the purchased product performs according to certain specifications. If defects are present, the seller agrees to repair or replace the defective product. The warranty can be expressed in writing or verbally in advertising, on the product, or through other means.

All expressed guarantees are not warranties. For example, if a retailer claims that its mattresses will give you the "best night's sleep ever," they are not issuing a guarantee that it will deliver upon that statement. It is considered puffery, which is a form of exaggerated language used to advertise a product and attract customers. It can be reasonably assumed that this claim is based only on the opinion of the person making the statement in an attempt to promote the product.

### Implied Warranty

An [implied warranty](https://www.investopedia.com/terms/i/implied-warranty.asp), which is also called an implied warranty of merchantability, is a guarantee that the purchased product functions in the manner designed. It need not be expressed to be valid. This guarantee is implied unless it is explicitly excluded—typical of "as is" sales.

Implied warranties also apply when sellers present and sell a product fit to fulfill a specific purpose. The buyer relies on the seller's expertise to purchase the product. Any statements made by the seller regarding the product can be considered assurances.

### Warranty Sub-Types

There are many different warranty subtypes, but the most common are extended warranties and special warranty deeds.

*   [Extended warranties](https://www.investopedia.com/articles/pf/07/warranties.asp) are available on products of substantial value, such as cars, electronics, and appliances. Although sold by the retailer, the manufacturer is responsible for executing the extended warranty on behalf of the customer.
*   [Special warranty deeds](https://www.investopedia.com/terms/s/special-warranty-deed.asp) transfer property ownership from one person to another and assure the buyer that the title at the time of sale is free of encumbrances, liens, or claims. This deed transfers ownership to the grantee with an expressed warranty about the title.

## Understanding Denied Warranty Claims

Even though manufacturers and retailers may offer warranties, there are instances where they may not honor these promises. We've outlined a few of these below.

### Altered Products

Warranties are meant to guarantee the condition of products and services as they are when they are purchased. This means that they typically only apply to products that have not been altered or modified after they were purchased.

For example, car enthusiasts enjoy changing engines or making other enhancements to a vehicle's drivetrain to coax a particular type of performance. Many modifications can nullify the vehicle's warranty coverage of the modified and affected components because they can affect the vehicle's reliability in ways for which the dealer and manufacturer are not responsible.

### Owner Actions

Each company has a unique process for addressing warranties. Even if a product is within the timeframe designated by a warranty, the company may require multiple proof points to show that the product failed in normal use.

If the product failed because of the owner's actions rather than a fault in the design or manufacturing, the warranty is not likely to be honored. For instance, the owner might have placed the product in an extreme environment that was too hot or too cold for its reasonable use.  

## Comparing Warranties and Guarantees

The terms warranty and guarantee are often used interchangeably, but there are subtle differences between the two. Both require sellers to act on certain promises they make to consumers about their offerings. However, the difference lies in the level of confidence the manufacturer expresses regarding the product's quality and functionality.

A warranty is a guarantee from a seller that if their product fails to meet certain specifications, a remedy is available. A warranty describes the conditions in which the seller is liable and what conditions are excluded. Although the buyer does not pay a separate cost for the warranty, the warranty price is included in the product's price.

A guarantee, on the other hand, is a promise or assurance from the manufacturer or seller that the product will work as described or [meet specific quality standards](https://www.investopedia.com/terms/d/declaration-conformity-doc.asp). If it doesn't, the manufacturer will fix or replace it. Guarantees are of no cost to the buyer and can be offered for both products and services.

> **Fast Fact**
>
> Foreign companies are subject to the Magnuson-Moss Warranty Act if their deceptive practices are likely to cause injury within the United States.

## Steps to Resolve Warranty Disputes

Understandably, it is easy to become confused with the coverage a warranty provides because of the language used in it. However, if you believe a warranty covers an issue, here are some steps you can take:

1.  **Review the Warranty Terms:** Begin by carefully reading through the warranty document to understand the coverage, exclusions, and obligations.
2.  **Contact the Seller or Manufacturer:** Initiate contact with the seller or manufacturer to report the issue and seek a resolution.
3.  **Gather Documentation:** Prepare necessary documentation, including the proof of purchase and records related to the product issue, to support your claim.
4.  **Follow Up:** Maintain communication with the responsible parties if the problem persists or needs additional attention.
5.  **Escalate as Needed:** If the issue remains unresolved, consider escalating the matter by contacting consumer protection agencies or seeking legal advice.

> **Important**
>
> Before a sale, sellers must provide written warranties to consumers for products that cost more than $15.

## Tips for Maximizing Warranty Benefits

As a consumer, there are some things you can do to minimize warranty issues:

*   Read the warranty before you buy, and purchase additional coverage from the seller if it is offered. Additionally, you'll need the receipt when dealing with a warranty issue, so it helps to keep it with the warranty.
*   Keep a copy of the warranty to refer back to if an issue arises.
*   Only purchase from companies known for adhering to their warranties and their customer service.
*   Use items for intended purposes in accordance with the instructions. Also, if there is a maintenance schedule, ensure you conduct and document any periodic maintenance.  
    

## How Does a Warranty Work?

A warranty is a guarantee issued by a seller to a buyer that a product will meet certain specifications. If the product does not meet those specifications, the buyer can ask the manufacturer or seller to correct the problem. Certain exceptions apply, and not every defect is covered. The terms and conditions of the warranty depend on the type of warranty covering the product.

## What Does Having a Warranty Mean?

A warranty means that a manufacturer or seller will replace or repair an item under specific conditions and circumstances. Generally, the conditions and covered issues are outlined in the warranty document.

## What Are the 3 Types of Warranties?

There are two types of warranties—express and implied. Each has sub-types intended for different circumstances and products.

## What Is an Example of a Warranty?

Imagine you purchase a new television. In the box with the instructions, you find a document that explains what the manufacturer will do if you experience specific issues within a certain time frame.

## The Bottom Line

A warranty is a guarantee from a manufacturer or seller that defective products will be repaired or replaced. The warranty sets forth the terms and conditions to which the warranty applies, as well as exclusions. There are two types—express and implied, with many sub-types in each category designed for specific products and services.

In the U.S., the Magnuson-Moss Warranty Act and the [Federal Trade Commission](https://www.investopedia.com/terms/f/ftc.asp)'s Uniform Commercial Code provide rules on consumer product warranties. If you experience a problem covered by a warranty, contacting the seller or manufacturer is the first step to resolving the issue. You can contact the FTC or file a lawsuit if they can't or won't fix a matter covered by the warranty.

> **Article Sources**
>
> 1.  Office of the Law Revision Counsel United States Code. "[15 USC Ch. 50: Consumer Product Warranties From Title 15—Commerce and Trade](https://uscode.house.gov/view.xhtml?req=granuleid%3AUSC-prelim-title15-chapter50&edition=prelim)."
>     
> 2.  Cornell Law School. "[Implied Warranty of Merchantability](https://www.law.cornell.edu/wex/implied_warranty_of_merchantability)."
>     
> 3.  Federal Trade Commission. "[FTC Staff Sends Warranty Warnings](https://www.ftc.gov/news-events/blogs/business-blog/2018/04/ftc-staff-sends-warranty-warnings)."
>     
> 4.  Federal Trade Commission. "[Report Fraud](https://reportfraud.ftc.gov/#/)."
>     
> 5.  Federal Trade Commission. "[Final Action: Magnuson-Moss Warranty Act Interpretations](https://www.ftc.gov/system/files/documents/federal_register_notices/2015/05/150522mag-mossfrn.pdf)," Page 5.
>     
> 6.  New York State. "[Uniform Commercial Code](https://dos.ny.gov/uniform-commercial-code)."