Definition
An express warranty is a guarantee made by a seller to a buyer about the quality, condition, or performance of a product. It can be written or verbal, and it promises that the product will meet a certain level of quality or reliability. Any defects, malfunctions, or failures can result in a claim under the warranty.
Key Takeaways
- An Express Warranty is a clearly stated assurance or promise made by a seller to a buyer about the quality, condition, or performance of a product or service. This can include specifications about the product’s lifespan, capabilities, or condition at the time of sale.
- Express Warranties typically go beyond the regular standards set by law, offering additional benefits to consumers. They can be either verbally communicated or written, though written warranties offer stronger legal protection to buyers.
- Violation of Express Warranties can lead to legal consequences for the seller. If the product or service does not meet the outlined warranty, the seller may be required to repair or replace the item, or possibly provide a refund to the consumer.
Importance
An express warranty is a crucial finance term due to its role in mitigating the risks associated with transactions, predominantly in sales and purchases. It provides a legally enforceable assurance from a manufacturer or seller to a purchaser that certain facts or conditions regarding the product or service being sold are accurate.
This assurance often relates to the quality, condition, description, or performance of the purchased item. The importance of an express warranty lies in its ability to foster trust and confidence in commercial transactions.
Buyers rely on these warranties for protection against faulty or misrepresented products or services, contributing to a more secure and reliable marketplace. Therefore, express warranties play a significant role in promoting fair business practices and consumer protection.
Explanation
An express warranty, within the domain of finance and commerce, primarily functions as a guarantee made by a seller to a buyer regarding the quality, condition, or performance of the goods being sold. The seller assures the buyer that the product or service will meet a certain level of quality and reliability.
The purpose of an express warranty is not just to drive sales, but also to instill trust and confidence in the consumer, as they would feel assured that their purchase offers value for their money and that any discrepancies or issues would be rectified by the seller. More specifically, an express warranty could be used to state that a product will function properly for a set period or promise to fulfill a set of features or specifications.
This allows the buyer to make informed decisions and to hold the seller accountable if the product fails to meet the agreed conditions. This accountability fosters a higher level of consumer protection and promotes ethical business practices, driving customer satisfaction and loyalty in the long run.
Examples of Express Warranty
Automobile Express Warranty: Many automobile manufacturers provide express warranties, which are detailed guarantees to repair or replace car parts or even the entire car depending on the severity of the problem within a specified period of time. For instance, a new car might come with an express warranty stating that all defects that occur within 3 years or 36,000 miles would be repaired at no cost to the owner.
Home Appliances Express Warranty: When you buy a refrigerator, washing machine, or any other home appliance, the seller or manufacturer often offers an express warranty that promises to repair or replace the appliance if it fails to operate as expected within a certain timeframe. For example, a dishwasher might come with a one-year express warranty ensuring its functionality.
Electronics Express Warranty: Express warranties are very common in the electronics sector. For instance, if you purchase a laptop, there might be an express warranty provided by the manufacturer that guarantees to rectify any hardware or software problems within a certain time period, often one to two years. The warranty might cover service at no cost, parts replacements, or even a full replacement of the laptop if the problem is unable to be resolved.
FAQ: Express Warranty
What is an Express Warranty?
An express warranty is a written guarantee that assures the buyer that specific promises regarding the product will be fulfilled and the manufacturer or seller will correct any defects or malfunctions. It serves as a promise that the product will meet certain standards of quality and reliability.
How does an Express Warranty work?
Express warranties are explicit guarantees given by the seller to the buyer at the time of sale. They may be a part of the sales contract or be provided in writing. The warranty usually specifies the time period during which the manufacturer will repair or replace defective parts, usually within a year of purchase.
What are some examples of an Express Warranty?
Express warranties are often found in contracts for the sale of goods, especially for big-ticket items like appliances, electronics, and automobiles. They can guarantee anything from the physical condition of the item, to certain performance measures, or even the life span.
What’s the difference between an Express Warranty and an Implied Warranty?
Express warranties are specific promises explicitly made by the manufacturer or seller, usually written. Implied warranties are unwritten promises, created by law, that go from the seller of a product to the customer. They assure that the product will function as it is supposed to.
How can I claim an Express Warranty?
If a product fails to perform as warranted, the buyer can often return it to the seller for repair, replacement, or refund. The exact method for claiming the warranty should be mentioned in the warranty document or purchase agreement. If not, it is advisable to contact the seller or manufacturer directly for instructions on claiming the warranty.
Related Entrepreneurship Terms
- Product Essential Features: The basic attributes or functionalities of a product that are stated under express warranty.
- Limited Warranty: Unlike an express warranty, it only covers certain parts or aspects of the product.
- Implied Warranty: It is a type of warranty which is not explicitly stated but assumed by law.
- Breach of Warranty: It is the failure of a seller to fulfill the terms of a promise, claim, or representation made concerning the quality or type of the product.
- Manufacturer’s Guarantee: A pledge made by a manufacturer stating they will repair or replace the product if it has a fault within a certain period of time.
Sources for More Information
- Investopedia: A comprehensive source for data related to finance and investing, including contents about express warranties.
- The Legal Information Institute (LII) at Cornell Law School: A non-profit organization that provides legal information. It includes helpful data about express warranties.
- The Federal Trade Commission (FTC): The FTC’s official website, which provides information on consumer protection laws and regulations including express warranties.
- Business Dictionary: An online resource providing easy-to-understand definitions of business terms, including express warranty.
