I Am a Small Business Owner. What Do I Need to Know About Warranties?

If you are a small business owner, you have probably already experienced the customer who is dissatisfied with the item or merchandise that you have sold him or her. While dealing with the unhappy customer is another issue altogether, it does pay to be knowledgeable about the warranties you are required to give for items that you sell. In other words, it is important to know what you are legally responsible for if the item you sold is unsatisfactory to the customer.
 
Basically, a warranty is a promise to your customer that you stand behind the item that you have sold or produced. A warranty generally tells your customer what you will do – and not do – if the item is defective or otherwise unsatisfactory. 
 
A warranty can be implied, or unspoken. These implied warranties don’t cover every little thing that could possibly be wrong with your item; these warranties also don’t cover problems resulting from the customer’s misuse of the item. Implied warranties may differ to some degree under state law, but a customer generally has four years in which to bring a claim against you based on the violation of an implied warranty. If you want to disclaim these warranties, or sell an item “as-is”, you often will need to include specific language telling your customer that you are not selling the item with any implied warranties. However, even if you sell an item “as-is”, and it causes serious harm to a person, you might still be liable for the harm resulting from that item. Plus, some states won’t let you sell consumer items “as-is”. 
 
The implied warranty of merchantability is your promise that your product or item is fit to be sold, or that it does what it is supposed to do, and isn’t defective in any way. Whenever you sell something to a customer, you sell that item with an implied warranty of merchantability. Likewise, the implied warranty of fitness for a particular purpose is a promise that you make about the suitability of your item to be used in a certain way. 
 
On the other hand, warranties can also be expressly made, either orally or in writing. If you provide your customer with an express warranty, then you cannot disclaim the implied warranties described above. Express warranties are specific, voluntary promises that you make to your customer about what you will do if your item doesn’t work properly or is otherwise defective. If you make an express warranty in writing, then you must also comply with the requirements of the federal law commonly known as the Magnuson-Moss Warranty Act. 
 
First, it is important to remember that the Magnuson-Moss Warranty Act does not require you to offer your customer a written warranty, and applies only to goods (not services) sold under a written (not oral) warranty to a non-commercial customer. Basically, if the Magnuson-Moss Warranty Act applies to your sales, you must title your warranty as either “full” or “limited”, and make the warranty information available in a single document that is clear and easy to read, before the customer buys the item. The Magnuson-Moss Warranty Act also prevents you from disclaiming or modifying any implied warranties, and using “tie-in sales” provisions in order for your customer to seek relief under the warranty. This means that your warranty cannot depend on the customer being required to buy another product in order to make a claim under the warranty for the original item. For instance, you cannot state in your warranty for a vacuum cleaner that it is only good if you also use a particular brand of vacuum cleaner bags. Finally, the Magnuson-Moss Act does not allow you to use deceptive or misleading language in your warranties. 

The information on this page is meant to provide a general overview of the law. The laws in your state and/or city may deviate significantly from those described here. If you have specific questions related to your situation you should speak with a local attorney.

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