Warranties and Their Legal Consequences - Term Paper Example

Introduction A warranty can be described as a statement that is made by the manufacturer or seller in regard to a product. The statement usually states that the product will perform in a manner that has been specified. There are numerous products that warrants exist. They include electronics, and infomercial products. The manufacturer usually dictates the extent in which a warranty should apply. There are also some services that are associated with warranties. An example of such a service is in a case in which a person goes to a garage for repair of car brakes; the most rational thing that is expected is the fact that the brakes should work properly. In case a service or product does not perform as promised, the warranty should ensure that exchanges or repairs are done in regard to the product (Martin, 2000). Basic information about warranties 1. They are loved by retailers On a factual basis, most of the retailers usually get more profit from the warranty contracts that they would get from the sale of the products. In actual sense, a consumer pays a price that is higher by approximately 20% or 10% in order for a warranty to be extended by the manufacturer. Most of the retailers would most probably subcontract the deal with a third party company for half the amount paid so as to avoid the risk that is involved with the risks. That is a strategy that may be used by companies in an attempt to maximize on their revenue. 2. The consumer may already be covered but he or she is not aware The holders of American express cards usually have the privilege of the extending the length of the warranty from the manufacturer by a year while the holders of a MasterCard or visa signature usually have the time doubled. There are also some manufacturers who may offer a discount rate that is fixed if the product’s level of damage does not reach the level of return. 3. The warrant will most probably not be used People usually enter into warrant contracts so as to reduce the risks that may be involved in case the product that has been purchased does not perform as expected. Most of the appliances that are bought with a warrant do not in most of the times break down. 4. Types of warranties 1. Manufacturer’s warranty This form of warranty is a warranty that is drafted and written by the manufacturer and included in the products that are produced by the manufacturer. The company usually guarantees that its products will be free of any defects for a specified time period after the day of purchase. The warranty however does not cover any accidental damages that are caused by the user to the product. In such an agreement, repairs or replacement of the product are usually done freely by the manufacturer (Barron, 2000). 2. Extended warranty This type of warranty is also known as a service contract. This type of warranty is an agreement that signed between the selling company and the consumer or a consumer and a store that is in offers coverage on behalf of the manufacturer for a fee. Manufacturers usually do not provide warranties that are extended but the store or retail store in which the product is purchased usually offers the warranty. The extended warranty is usually added as a cost to the price of the product. The purchaser of a product should ensure that the warranty is done in writing and he or she should not rely on the salesperson to make an explanation in regard to the warranty. 3. Store warranty A store warranty can be perceived to be another name for an extended warranty or service contract. In such a scenario, the store offers to extend a warranty for a fee. The warrant is associated with a risk in that if the store runs out of business, the purchaser will be left without any form of coverage (Parisi, 2000). 4. Third party warranty The warranty can also be called a service contract. The warranty is different from a store warranty on the side of the company that offers the coverage of the warranty. The consumer will have to pay for the extended warranty at the place of purchase; however, the difference comes in the sense that a third party will offer coverage for the extended warranty. The agreement should be well stated in the extended warranty that the coverage will be offered by a third party as opposed to the store. 5. Implied warranty An implied warranty is a simple kind of warranty. The warranty is implied under law because the law clearly stated that every new product should work as is expected for a time that is reasonable. A warranty that is implied does not have to be written under a signed agreement or verbalized. The warranty is founded out of common sense. 6. Express warranty The warranty is usually described as a warranty that is written or verbal and it usually promises a certain level of quality or man ship in the product. Some commodities are however not associated with express warranties. 7. Verbal warranty A customer should always avoid a warranty that is verbal from a sales person. This is because the warranty will not be verifiable and that will mean that the sales person will not be legally answerable to the customer incasing of any problems with the product purchased. Advantage of getting a warranty direct from the provider Saving of money- the direct purchasing of a warranty from the provider will be cheaper because the cost of the middle man will be cut. The middle men that may be involved in any transaction would all aim at benefiting from the transaction and that would be a negative thing to the person getting the warranty. That means that for a warranty to be cheaper, the consumer has to acquire the warranty directly from the service provider. The aim of most consu7mers is to acquire a quality product at a cost that is cheap and that would make them to increase on their net income. Therefore, the issue of acquiring a direct warrant from the service provider would work in their favor. Increased expertise level- most of the stores are usually knowledgeable on the selling part as opposed to the maintenance and repairs or the area of extended warranties. If a person deals directly with the service provider, he or she will get the advantage of direct contact and direct help from the service provide and that will also help in the cutting of any middle cost that may be incurred in the course of transactions. Most of the store owners also outsource the part of extended warranties and that will mean that the cost will be more as compared to dealing with the service provider directly. There is benefit of special features- warranties that are offered by dealerships are usually limited for some features. The service provider usually offered a range of services and that will ensure that there is comprehensive service provision. Availability of variety- when visiting a service provider, there will be a probability that the service [provider will offer a wide range of plans that are assorted than a person would get from a dealer. There are some warranty plans that charge deductibles while most of them do not. There are some dealerships that offer parts only while others cover mechanical breakdown as well as wear and tear. In the recent times, there has been aggressive increase in cost of labor and if the cost of labor is not included in the warranty, the consumer will have to incur more costs in order to pay for the labor cost. Convenience- the advantage of dealing with provider of the service is the fact that the provider will offer all the services from a single location. Some of the dealership usually offers only part of the services and that means that a person will be forced to outsource the rest of the services and that would be inconvenient especially if the services are not available in one single location. Advantages of warranties Peace of mind and financial assistance The availability of a warranty will ensure that the consumer will not have to be worried a lot about any instances of breakdown that may be associated with product. In most of the times, product may breakdown but there are no available spares that would be a big loss on the side of the asset owner because some f the products may be very expensive and the repair would be the cheapest alternative. In an illustration of a car, person may buy a used car and a warranty of a car that is good can help offer a peace of mind and assistance that is financial in case there are any electrical faults or any form of failure. If a person is importing a car from a different country, a market with an after warranty cabin extend the cover that was been offered by the manufacturer. Tailor cover for needs The customer may choose the type of warranty that is required. That will ensure that there is comprehensive cover for the customer needs and that will ensure that there is customer satisfaction in all that the customer requires in the form of warranty. That can also happen in a case whereby the customer prefers different services from different service providers and that will ensure that the preferences of the customer is obeyed since the customer will get whatever he or she needs. Break down recovery The recovery in case of breakdown usually applies to cars. There are some car warranties that cover recovery in case of a break down. However, it is the responsibility of the customer to organize the process f recovery and to reclaim the costs that are to be incurred in the process. There are some warranties that come with membership for breakdown recovery and that helps in the improvement of the level of cost effectiveness. That would be most preferable to most people because people usually search for cost cutting avenues and the avenues that will work to their favor. Savings on other products There are some companies that deal with warranty and at the same time have access to leisure products and that helps in the representation of good value and savings that are significant. The products that are offered are usually major accompaniments for the warranty and that will ensure that the customer will get more services from a particular place. Most people do not prefer searching for products from different places and they would prefer finding everything in one place. Ability to budget A warranty usually specifies the parts of the product that would be attended to incase of a damage or loss. That means that the owner can properly budget for the cost that is expected to be incurred if a certain thing happens that that is good for planning purposes (Hart, 1993). Profession advice The warranty companies usually hire experts in the various departments or sections. That means that the customers will be attended to by people who have knowledge in the specific areas. The level of specialization in the workers will increase because they will get involved in the same things over and over and hence the level of professionalism and accuracy increases and that will be a good thing for the customers because they will get the chance of been served by experts. Disadvantages Claim limits Most warranties usually offer a claim limit to the value of the products or a limit for particular products. The warranties have a limit for every claim made. That means that the customer may have to dig deeper into his or her pocket so as to cater for the costs that may be above the claim limit. That will be a disadvantage because the customer would expect the warrant to cater for all the costs. There are also some warrants that do not cater for labor costs and the customer would have to incur an extra cost for payment of labor (Haas, 2002). Increase in cost of product ownership The warranty cost is usually different from the cost of the product that is been purchase. That will mean that the initial purchase price for a product will be the cost of the product plus the additional warranty cost. However, this factor is not wholly a disadvantage because incase the customer would have a chance to claim the warranty, everything would have worked to his or her advantage because the cost that would have been incurred for maintained would have been reduced. Validity and exclusions There are some warranties that may not be valid. That means that the customer will have to incur the cost of paying the warranty and the cost of repairing the product in case there is a problem with the product. The issue of validity mainly exists if a person is offered a verbal warranty. A warranty that is verbal does not count and it cannot be used in a court of law and that will mean that the customer would have loosed his or her money. The other instance that validity is a concern is in a case that the company that offered the warrant closes down as a result of financial matters. That would imply that the customer would not receive the services that were supposed to be offered by the warrant. The issue of exclusion comes in a case whereby a warranty makes it clear on the parts that it deals with and the parts that will be excluded from the warrant. That means that the customer will have to incur an extra cost so as to cater for the part that has not been sorted out by the warranty. The other factor would be the failure on the part of the customer not to follow the conditions and terms that have been set by the manufacturer and that would be a reason for invalidating the warranty. The validity of the warranty is also subject to modifications and usage of the product (Mayer, 1989). Conclusion As a result of the many hindrances that have been found in the area of warranties, there has been the emergence of lemon laws. The laws have been formulated in an attempt to help customers that have defective or faulty cars. The automobiles are usually protected by the lemon laws and the state that incase there is a serious defect on a car; the manufacturer may be forced to attempt to repair the problem. The law also states that the defect must be detect within a time period that is specified and that will ensure that the defect is repaired. A car or product should be termed as a lemon under these laws if the defects that are available affect the usage of the product significantly and there have been significant attempts to repair the defects. Therefore, the customers should be aware of their rights and the channels that they should follow in order to ensure that justice is served (Fulran, 1999). References Barron, N. (2000). Return to Sender: Getting A Refund or Replacement for Your Lemon Car. National Consumer Law Center. Fulran, J. (1999). A Businessperson's Guide to Federal Warranty Law. U. S. Federal Trade Commission. Haas, C. (2002). Consumer Reports Law Book. editors of Consumer Reports Books, Consumer Reports. James, L. (2002). Warranties and their legal consequences. Oxford; Oxford printing press. L. Hart. (1993). Extraordinary Guarantees: A New Way to Build Quality Throughout Your Company and Ensure Satisfaction for Your Customers.. Free press. Martin, L. (2000). Warranties. New York; Free press. Mayer, R. (1989). The Consumer Movement: Guardians of the Marketplace. Twayne Publishers. Parisi, N. (2000).Understanding Consumer Rights. McGraw Printing press Read More