“The customer is always right!” may be your mantra. You do right by them, and that approach to customer service establishes the core of your business. But, what happens when the customer is hostile, or too demanding? Because you never know when unreasonable customers will rear their heads, it is critical to incorporate a solid warranty in your terms and conditions.
What is a Warranty?
Fundamentally, the warranty in your terms and conditions (or standard terms) is your commitment that the products or services that you are selling will be of a certain quality. Typically, your warranty is actually made up of a bundle of warranties. Warranties fall into two general categories: express warranties and implied warranties.
An express warranty is a warranty created by your own words or actions to your customer. Unlike express warranties, implied warranties really have nothing to do with your actual words or actions. Implied warranties are provided by law, such as the Uniform Commercial Code. For example, regardless of your words or actions, you may be subject to an implied warranty of fitness for a particular purpose.1 If subject to such a warranty, you are providing a warranty that your product will be suitable for your customer’s special purposes that you have reason to know about. Sound terrible? The good news is that you can disclaim implied warranties if your warranty is properly stated.
The Power of a Disclaimer
A solid warranty typically starts with an express warranty and then is followed with a disclaimer of all other warranties, whether express or implied. A proper disclaimer placed in the context of your standard terms can function to wipe out puffery or exaggeration that may arise as part of your sales process. The power of a clear disclaimer is that you can leave your express warranty in your standard terms as the sole warranty that you are making to your customer.
An Outline of a Solid Warranty
Solid warranties are highly customized to properly set forth what you will stand behind, and what action will cause them to be invalid. With that being said, a sample warranty that tracks the basic structure of a good warranty is as follows:
Manufacturer warrants that the Product will be free of defects in workmanship and materials under normal use and service for twelve months after initial delivery (the “Warranty”). The Warranty is void if the Product is subject to misuse, accident, and/or has not been maintained in accordance with the instructions and recommendations stated in the Manufacturer manual. Manufacturer’s obligation under the Warranty is limited to the repair or replacement at its facility. THIS EXPRESS WARRANTY IS IN LIEU OF ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR OTHER WARRANTY. IN NO EVENT SHALL MANUFACTURER BE LIABLE FOR GENERAL OR CONSEQUENTIAL DAMAGES, WHETHER RESULTING FROM DELAY IN DELIVERY, LOSS OF USE, PARTS FAILURE, OR OTHER CAUSE.
The basic structure of a solid warranty is as follows:
- State the express warranty. Consider what you are willing to stand behind related to your product or service, and for how long.
- Be explicit about invalidity. The warranty should list actions by the customer that will invalidate your warranty. A common basis for invalidity is if the customer fails to follow proper procedures for treating products.
- Disclaim all other warranties and certain forms of damages. This should cover implied warranties and other warranties that may have been made in the sales process, and damages beyond direct damages that may arise.
The order of each point may vary based on your circumstances, but each of those concepts must be considered to have a solid warranty.
Custom Warranties Are More Solid Warranties
A solid warranty proves to be a valuable tool in establishing the limit of your responsibility when faced with those inevitable unreasonable customers. Having a customized warranty plays a key role in your terms and conditions.
If you are interested in considering further key factors in terms and conditions, see our downloadable form here. The form includes annotations and highlights areas of particular interest related to terms of sale.
1 See Wis. Stat. § 402.315 (2019-20)