Limited warranty: Overview, definition, and example
What is a limited warranty?
A limited warranty is a type of guarantee provided by a manufacturer or seller that offers repair, replacement, or a refund for a product if it fails to perform as expected within a specific period. However, unlike a full warranty, a limited warranty comes with certain restrictions or conditions. These conditions may limit the scope of coverage, such as excluding certain damages, requiring specific actions for claims, or covering only certain parts or aspects of the product. Limited warranties are often used for consumer goods, electronics, and appliances.
Why is a limited warranty important?
A limited warranty is important because it provides consumers with some assurance that the product will function as promised, while also protecting the seller or manufacturer from liability for issues outside of their control. It helps set clear expectations about what is covered under the warranty and for how long, reducing the risk of misunderstandings or disputes. For businesses, offering a limited warranty can help build customer trust and confidence in their products, while still managing the potential risks associated with returns or repairs.
Understanding limited warranty through an example
Imagine a company sells a smartphone with a one-year limited warranty. The warranty covers defects in materials or workmanship but excludes damage caused by accidents, misuse, or unauthorized repairs. If the phone stops working properly within the first year due to a manufacturing defect, the customer can return it to the company for a repair or replacement. However, if the phone stops working because it was dropped or exposed to water, the warranty will not cover the repair, as those types of damages are excluded from the coverage.
In another example, an appliance manufacturer provides a three-year limited warranty on a washing machine. The warranty covers repairs for mechanical issues that arise under normal use, but it does not cover repairs for damage caused by power surges or the failure to follow proper maintenance instructions. If the washing machine breaks down due to a defect, the manufacturer will repair it; if the damage is due to misuse, the warranty will not apply.
An example of a limited warranty clause
Here’s how a limited warranty clause might look in a contract:
“The Manufacturer provides a limited warranty for a period of 12 months from the date of purchase. This warranty covers defects in materials and workmanship but does not cover damage resulting from misuse, accidents, or unauthorized repairs. The Manufacturer’s sole obligation under this warranty is to repair or replace the defective product.”
Conclusion
A limited warranty offers a form of protection for consumers, ensuring that a product will work as expected for a certain period, but with clear limits on what is covered. By defining the scope of coverage, a limited warranty helps set expectations for both the consumer and the seller, reducing the potential for disputes. It provides a balance between consumer protection and business risk management, helping to maintain confidence in the product while limiting the seller's liabilities.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.