Which of the following is a difference between an express warranty and an implied warranty?

A guarantee by a seller to provide replacement or repairs for a faulty product or service within a specified time period after the purchase

What is an Express Warranty?

An express warranty is a guarantee by a seller to provide replacement or repairs for a faulty product or service within a specified time period after it was purchased. Such warranties are printed on a product’s packaging or are offered as an option to the buyer. Buyers rely on the guarantees and sometimes purchase products because of them.

Under the 1975 Magnuson-Moss Warranty Act, the seller must provide a written express warranty that the product will be as demonstrated by the company. Any product costing more than US$15 is eligible for a written express warranty.

Summary

• An express warranty is a guarantee by a seller to provide replacement or repairs for a faulty product or service within a specified time period after it was purchased.
• The buyer should depend on the guarantee made by the seller when deciding whether or not to purchase the product/service.
• Express warranties are specific promises of a seller to a buyer, either orally or in writing. An implied warranty, which is an unwritten guarantee that a product or service should work as expected, may come into force in the absence of communicated guarantees.

Requirements for Express Warranty

For express warranty to exist between the seller and the buyer, the following conditions must be satisfied:

1. A statement must be made by the seller about the product/service being offered, giving the buyer a description of the product/service or by providing the buyer with a sample of the product/service.
2. The seller does not have to explicitly express that he/she is making a guarantee; as long as what is being said is a factual statement and as long as the buyer relies on the facts made by the seller when deciding to make the purchase.
3. The buyer should depend on the guarantee when deciding whether or not to purchase the product/service. If a seller could prove that the statements that were made did not play a role in the buyer’s decision-making process, there is no breach of warranty.

Practical Examples

For example, a person wants to purchase a laptop from Company A for getting a specific job done. A representative from the company hands the buyer a brochure with details on a specific laptop; the brochure states how the laptop is capable of getting the buyer’s desired job done. Additionally, the representative orally confirms that what is being stated in the brochure is true.

However, the buyer, after purchasing the product, faced certain issues with the laptop. The product failed to meet the promises made by both the company brochure and the company representative.

In such a case, if the following two conditions are satisfied, the buyer can sue Company A for breach of express warranty:

1. The company representative makes an affirmation that the product had a certain ability; and
2. The buyer relied on this guarantee while making the decision to purchase the laptop.

Advertisement claims made about the quality, functionality, lifespan, and efficacy of a product can also set a precedent for an express warranty, and the buyer may be entitled to free repair services or full replacement. However, not every claim made by a seller is enshrined in warranty law. Exaggerated statements made about the product in the advertisement do not necessarily constitute express warranties.

For example, if a company claims that its product is “the best in the world,” and if the buyer, after using the product, disagrees with this statement, he or she might not necessarily be eligible for a refund unless specifically stated.

E-commerce companies generally include express warranties on the goods they sell in part because of the nature of how online shopping is conducted.

For example, if a consumer buys shoes online, but when it arrives, the item is the wrong size or wrong color, an express warranty may entitle the consumer to a refund or replacement.

Express Warranty vs. Implied Warranty

Express warranties are specific promises of a seller to a buyer, either orally or in writing. An implied warranty, which is an unwritten guarantee that a product or service should work as expected, may come into force in the absence of communicated guarantees.

For example, when ordering a pizza at a restaurant, it comes with the implied warranty that it is edible.

The Uniform Commercial Code – a set of laws governing all commercial transactions in the United States – makes reference to an “implied warranty of merchantability,” stating that goods purchased conform to ordinary standards of care.

More Resources

CFI offers the Commercial Banking & Credit Analyst (CBCA)™ certification program for those looking to take their careers to the next level. To keep learning and advancing your career, the following resources will be helpful:

• Caveat Emptor (Buyer Beware)
• Product Life Cycle
• Reps and Warranties
• Sale and Purchase Agreement