If you are thinking of including specific goods or services as part of your offering to clients, you should be aware of its implications on your business. This type of offering is an express warranty which can impact your business in terms of contract interpretation and consumer rights. Some examples include lifetime guarantees for goods or cashback provisions. In this article, we explain express warranty provisions and their impact on your business.
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Definition of Express Warranty
An express warranty is an explicit guarantee of something, often covering a business providing goods or services. An express warranty forms a written or verbal representation from the business to the customer. The warranty can pertain to any aspect of the goods or services. Although, an express warranty typically bolsters claims about the quality of what the business is offering, such as:
- the state, condition, performance or characteristic of the product;
- what the product can do and for what amount of time; and
- the availability of servicing, supply or parts of identical products.
Implications of Express Warranties
It would help if you communicated express warranties directly. Therefore, you must be aware of the express warranty’s implications if a customer calls upon the warranty. This is because your website or product pages can often outrightly state the terms of an express warranty. Therefore, the warranty represents a binding contract term between you and the customer.
Additionally, you should be aware of the commercial ramifications of deciding to insert an express warranty. For example, suppose you expressly warrant that all products you offer include a change-of-mind refund guarantee. In that case, you need to be prepared to comply with this guarantee despite any monetary effects this may have on your business.
In many cases, the solution is to have clear and precise drafting of any express warranties you may want to add to your products or services. For example, Essteele lists several ‘Warranty Exclusions’ on their website to exclude particular circumstances in which products will not be eligible for a refund.
Continue reading this article below the formExpress Warranties and Australian Consumer Law
Any express warranties you make about your products or services will be subject to the provisions of Australian Consumer Law (ACL). The ACL provides several protections and guarantees for consumers which you, as a business owner, cannot exclude.
In particular, the ACL states that consumers have a guarantee that any products or services they receive must meet any express warranties that you give to them. If the products or services do not meet the warranties, the customer has many remedies they can seek against you. The remedies will depend primarily on how far the product or service does not meet the express warranty terms. This is a breach of an express warranty.
If the breach is minor, the customer is entitled to:
- a repair or replacement of the product;
- a refund; or
- compensation concerning consequential losses arising from the breach;
In the case of minor breaches, you, as the supplier, are entitled to choose the remedy for the customer.
If the breach is major, the customer is entitled to:
- reject goods or services and select either refund or replacement; or
- request compensation for the drop in value of good or service,
If it is a significant breach, then the customer chooses the remedy.
Key Takeaways
Express warranties are helpful for businesses looking to promote security and surety for customers at the time of purchase. However, their effect cannot be understated. You should be aware from a legal and commercial perspective of how express warranties can impact your business and what you must do to comply with your own warranties.
If you have any questions concerning the implications of express warranties or drafting an express warranty to include as part of your terms and conditions, our experienced contract lawyers can help 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 on 1300 544 755 or visit our membership page.
Frequently Asked Question
Generally, an express warranty is a direct promise by a supplier of goods and services as to a specific aspect, often its quality.
Under Australian Consumer Law, consumers have a guarantee that any products or services will meet the express warranties that you provide alongside them. This means that if you fail to meet an express warranty, you will not only be in breach of your own terms. However, you will be in breach of a consumer guarantee under the Australian Consumer Law.
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