When to provide a warranty and when not to

Dear Mary, I am in the process of developing and marketing a very exciting product, which will become a common household item. Should I put a written warranty on the product? Are there different kinds of warranties?

There are three types of warranties: express, implied and statutory. All warranties relate to the character, quality, identity, condition or title of merchandise.

An express warranty is a promise, assurance or guaranty that is created by a seller’s words or conduct. An example would be if you bought a television and it came with a written guarantee that it would continue working for one year.

An implied warranty is when the guarantee is so essential to the sale that the parties would have included it in their agreement had they thought to write it down. An example of an implied warranty is the warranty of merchantability, which means that when you buy something, it has to meet a reasonable buyer’s expectations.

For example, if you bought an apple that looked good but was full of worms, you would want your money back, since the apple is inedible. It didn’t live up to your expectations and if you had known it was full of worms, you wouldn’t have bought it.

If you’re going to include a written warranty on your product, it should clearly identify to whom the warranty is extended. It should also clearly identify the products, parts, characteristics, components or properties covered by and/or excluded from the warranty.

If there is a defect, malfunction or failure of the product to conform to your written warranty, you should state what you will do about it, including the items or services that you are willing to pay for or provide (and those that you will not).

Be very clear about when the warranty term begins and ends.

Explain what a consumer must do if their product has an issue during the warranty period. Include information on how to solve informal disputes between the purchaser and the seller.

State any exclusions or limitations on the warranty. You may also want to state that the warranty provides certain legal rights, and that the consumer may also have other rights that vary from state to state.

There are two kinds of written warranties that you can have: “full” and “limited.” A full warranty must state its duration and meet certain federal standards for warranty. Otherwise, you must use the term “limited” to describe the warranty.

A full warranty requires the person making the warranty to remedy a problem within a reasonable time and without charge, not imposing any limitation on the duration of any implied warranty, and not limiting or excluding certain legal damages.

With a full warranty, if you can’t fix a defect after a reasonable number of attempts, you have to give the consumer a refund or replacement without charge. The consumer should only have to notify you of a problem.

Some of the statutory warranties you will encounter in California include warranties of title and of quality (the Lemon Law). A “title” warranty provides that you can convey clear title to the goods. California’s Lemon Law provides consumers with a statutory recourse and procedure when goods don’t live up to consumers’ reasonable expectations.

As you can see, the subject of warranties can be complex. It’s good policy to always treat consumers how you would want to be treated, be specific about your products’ capabilities and limitations, and remedy problems early.

Mary Luros is a business law attorney with Hudson & Luros, LLP, in Napa, and can be reached at mary@hudsonluros.com or 418-5118. The information provided here is not intended as legal advice, nor does it form an attorney-client relationship with the author. The author makes no representations as to the reliability or accuracy of the above information. In a perfect world we wouldn’t need disclaimers — or attorneys.