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Warranties assure customers of the quality and reliability of goods. They also form an essential part of their legal rights. There are different types of warranties you might provide as a small business owner, and various remedies are available for breach of warranty. Understanding warranties and your obligations is crucial to ensuring compliance with the law and building trust among your customer base. This article will explain warranties and highlight several legal considerations for small business owners.
What is a Warranty?
A warranty is an assurance sellers provide to their customers. It protects the buyer by offering remedies if the seller’s products fail to meet specified standards. They can be express or implied.
An express warranty means you explicitly state specific promises regarding a product’s features, performance, or durability, either verbally or in writing. You might provide an express warranty through:
- a written contract;
- product labels; or
- marketing materials.
Suppose you advertise clothes that can endure regular wear and tear for two years. But after only a year, customers find seams fraying and colours fading. This is a breach of the express warranty because the product failed to meet the promised quality standards. In this case, the law allows your customers to enforce the warranty and seek a remedy, such as a free repair, replacement, or refund.
An implied warranty guarantees that a product is fit for its intended purpose and of reasonable quality. Implied warranties exist automatically. For example, if you provide faulty goods, they are unfit for their intended purpose, and customers can seek a remedy.
You may also provide extended warranties, extending the coverage beyond the initial warranty timeframe. These warranties act like insurance policies, typically offering protection against defects for a longer period. Sellers often provide extended warranties for high-value items where customers may want additional protection beyond the standard time limit. They can offer peace of mind to customers, but it is important to note that they are optional.
If you offer extended warranties, you might sell them separately and at an additional cost. Implied and express warranties, however, are included in the original purchase price.
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Your Obligations as a Small Business Owner
1. Understanding Warranties are a Consumer Right
Customers can legally enforce warranties, whether implied, express or extended. You do not have to offer express or extended warranties in the UK. However, implied terms exist with every product you sell to your customers. If they are not fit for purpose or do not conform to the customer’s expectations, the law requires you to provide a remedy.
2. Providing Clear Warranties
You should be clear and accurate when advertising goods and making express claims about their quality. Doing so can help to build trust and confidence in your business and reduce the risk of misunderstandings. Ensure you do not overpromise. This will increase the likelihood of a breach, and providing a remedy will be at your business’ expense.
3. Complying with Legal Requirements
You should ensure that your warranties comply with the relevant legal requirements. Different types of products require different warranties. You can seek legal advice to clarify your obligations and ensure that your operations comply with consumer rights law.
4. Managing Warranty Claims
You should develop a straightforward procedure for managing warranty claims effectively and make this process transparent to customers. You must provide prompt assistance to customers and offer repairs, replacements or refunds depending on the terms of the warranty.
If you provide warranty documents, ensure these are clear and set out the procedure customers should follow.
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Key Takeaways
Warranties are an essential part of your small business’s customer service strategy. Warranties are assurances you provide to your buyers about the quality, performance or condition of a product you sell. By understanding, managing and promptly and efficiently remedying breach of warranty, you can enhance customer satisfaction, trust and confidence in your business.
The following table provides a summary of key terms.
| Term | Explanation |
| Express warranty | An express warranty is a seller’s explicit statement about a product, promising specific features, performance or durability. Sellers can communicate these warranties verbally or in writing. |
| Implied warranty | Implied warranties ensure goods are fit for their intended purpose and are of reasonable quality. They exist automatically, even if the seller does not explicitly state that an implied warranty exists. |
| Extended warranty | Sellers might offer extended warranties to prolong the warranty period. These warranties protect against defects for longer, often at an additional cost, like an insurance policy. |
If you are a small business owner who would like advice about your obligations regarding warranties, our experienced startup lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today at 0808 196 8584 or visit our membership page.
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