A warranty is a legally enforceable assurance about certain circumstances of a transaction. Ordinarily, the warranty is related to a contract and involves representations about the subject matter of the contract. For example, a watchmaker may warrant that his or her watches can withstand submersion underneath five feet of water, or a mechanic may warrant that his or her repairs will make a car run like new.

Warranties may be made orally or in writing, and can even arise by implication without any verbal statement at all.¹ Of course, proving that a warranty was made is easier with proper documentation. Make sure to:

Request oral warranties be reduced to writing.
Read and understand the warranty before you purchase the product.
Save all necessary paperwork such as the original receipt, a copy of the warranty and any maintenance or repair records.
Comply with all warranty requirements by maintaining and using the product in the manner specified in the warranty paperwork.

Below are the topics covered in this chapter.

Service Contracts
Express vs. Implied Warranties
Express Warranties
Implied Warranties
Warranties That Cannot Be Disclaimed
- Automobiles
- Warranty of Habitability
- Car Parts
- Farm Equipment
- Mobile Homes
- Manufactured Homes
- Residential Telephone Equipment
- Aftermarket Rustproofing
- Wheelchairs
- Negotiable Instruments
- Solar Thermal Systems
Disclaimers
Remedies
Modification of Remedies
Federal Warranty Disclosures
Getting Warranty Service

Service Contracts

15 U.S.C. 2301(8)
N.Y. Insurance Law 7902(k)

It is important to note that when you purchase a car, appliance or other product, you may be offered a service contract. Although similar to a warranty and often called an "extended warranty," a service contract is not a warranty. Service contracts are contracts to perform repair or maintenance of a product. The duty to perform these services under a service contract is automatic, while under a warranty there is no duty to repair unless the warranty is breached.

Unlike a warranty, service contracts are not included in the price of the purchase. If a warranty is already provided and covers repairs, you may be paying extra for a largely unnecessary service contract, particularly if the service contract is limited to repair of defects.

Express vs. Implied Warranties

One way to categorize warranties is by the way that they are formed. In this respect, two basic types of warranties exist: express and implied. There is no legal difference between the two except the way in which they are created. Both are warranties, they are equally enforceable, and both may generally be disclaimed.

An express warranty is created by the words or actions of a specific seller. The most straight-forward example of an express warranty is a written statement that if the goods stop working as intended during a certain period of time, then the seller will repair or replace them free of cost to the consumer. By contrast, an implied warranty arises by law in certain transactions, such as the sale of goods by a merchant or the lease of an apartment, without any assurance being made by the seller.

Express Warranties

N.Y. U.C.C. 2-313

Express warranties can arise in any sale of goods so long as the seller makes representations about the qualities or characteristics of his or her goods. The most obvious representation is an affirmation of fact or promise by the seller about the goods (e.g., the watch is made out of 18-karat gold), but any description of the goods (e.g., the watch is gold-colored) will create an express warranty, as will samples or models.² It is worth noting, however, that an affirmation of the value of the goods will not create a warranty (e.g., the watch is worth $100). Statements of the seller's opinion about the goods (e.g., "in my opinion, the watch is the highest quality") will not create a warranty either. However, if the statements are false, they may be the basis for an action in misrepresentation or fraud.

Implied Warranties

As stated above, implied warranties arise in certain situations without any verbal assurances being made. Since there is no written warranty agreement, proof has to be made in other ways, but ordinarily a receipt will suffice.

The following implied warranties arise in the sale or lease of goods:

Warranty of Title: In every sale of goods, the seller warrants that he or she will transfer good title and the transfer will be rightful, free of any security interest, lien, or encumbrance.³ In other words, the seller warrants that once the sale is complete the buyer will be the full, rightful owner of the goods.
Warranty Against Infringement: If the seller is a merchant regularly dealing in goods of the kind sold, he or she also warrants that the goods do not infringe on any copyrights, patents, or trademarks.⁴
Warranty of Merchantability: If the seller is a merchant with respect to the goods being sold, he or she warrants that the goods are merchantable. The primary requirement of merchantability is that the goods are fit for their ordinary purpose (e.g., an oven will become hot enough to cook food). Other aspects of the warranty require the goods to pass without objection in trade; to be of even kind, quality and quantity within each unit and among all units involved; to be adequately contained, packaged and labeled; and to conform to any promises or affirmations of fact on the container.⁵
Warranty of Fitness for a Particular Purpose: If the seller has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller's skill or judgment to select or furnish suitable goods, the seller warrants that the goods are fit for that particular purpose.⁶ The easiest way to create this warranty is to tell the seller why you need the goods, and that you are relying on his or her skill to provide what you need; even if the seller never explicitly states that he or she will provide suitable goods, the goods must be fit for the purpose you told the seller.

In the purchase of a new home, the seller makes three warranties: a one-year warranty that the home will be free from defects due to a failure to have been constructed in a skillful manner; a two-year warranty that the plumbing, electrical, heating, cooling and ventilation systems will be free from defects due to a failure by the builder to have installed the systems in a skillful manner; and, a six-year warranty that the home will be free from material defects (i.e., a defect that would have excused the buyer from purchasing the home).⁷ The warranty only covers defects in the workmanship, materials and design used by the builder and its subcontractors, and does not cover any defects that would be obvious upon inspection.

Every operator of an adult care facility provides in the admission agreement a warranty that the premises will be fit for human habitation and free of any dangerous conditions.⁸

Warranties That Cannot Be Disclaimed

Some warranties cannot be disclaimed or limited. These warranties can be either express warranties that must be provided by law or implied warranties. Either way, they always exist in a certain set of circumstances and any attempt to eliminate them is void.

Automobiles: All new and many used cars must be sold or leased with a warranty under the New York Lemon Laws. For more information, see the Automobile section of this Consumer Law Help Manual.

Warranty of Habitability: In every residential lease the landlord warrants that the premises are fit for human habitation and free of any dangerous or hazardous conditions. The only exception is if the lessee (the person renting the property) creates the dangerous condition himself or herself.⁹

Car Parts: All car parts must be warranted to be fit for their ordinary purpose for 90 days after delivery or 3,000 miles, whichever is shorter.¹⁰

Farm Equipment: Every supplier of new farm equipment must provide a one-year warranty. If the farm equipment is defective, the supplier can attempt to repair it. If he or she cannot, the buyer may either receive a replacement or a refund.¹¹

Mobile Homes: The dealer and manufacturer of a mobile home must provide a warranty that the mobile home is free from any substantial defects in materials or workmanship.¹²

Manufactured Homes: The installer and manufacturer of manufactured homes must affix a warranty seal to the home before it may be installed.¹³ Affixing a seal requires the installer to warrant that the installation of the home meets the standards of the Uniform Code, and that the installer is certified by the New York Department of State. It requires the manufacturer to warrant that the manufacturer is approved to construct manufactured homes by the United States Department of Housing and Urban Development; that the home was constructed in accordance with all applicable federal, State, and local statutes, laws, codes, rules and regulations; and that the manufacturer is certified by the Department of State.¹⁴

Residential Telephone Equipment: Any seller of residential telephone equipment must provide a one-year warranty for new equipment, 90 days for rebuilt equipment and 60 days for used equipment. The warranty must be to repair or replace the equipment.¹⁵

Aftermarket Rustproofing: Any person who applies aftermarket rustproofing to motor vehicles must provide a five-year warranty that the body sheet metal, structural members and frame of the vehicle will not rust through from the inside out. The minimum remedy is either to repair the damage or pay for the costs of repairing the rust damage.¹⁶

Wheelchairs: All wheelchair manufacturers must provide the consumer with at least a one-year warranty.¹⁷

Negotiable Instruments: A variety of warranties are created when negotiable instruments, such as checks, are transferred from one person to another. These warranties are generally created by selling or indorsing instruments with a signature or presenting the instrument to a bank for payment, and warrant against problems with the instrument like forgery or alteration.¹⁸

Solar Thermal Systems: All customers who purchase solar thermal systems must be provided with three warranties: a full one-year warranty by the installer against malfunction or failure due to improper installation or a defect in hardware used in installation; a full one-year warranty by the system manufacturer and seller against a defect in materials, manufacture or design of the system; and, a full three-year warranty by the system manufacturer and the seller against a defect in materials, manufacture or design of a solar collector, tank or heat exchanger.¹⁹

Disclaimers

To disclaim a warranty means to negate its existence. A disclaimer is a statement that the warranty is negated. Warranties may also be limited, meaning that the warranty can be confined to guarantee less. Most warranties other than those listed above may be disclaimed or limited. How the warranty may be disclaimed or limited depends upon the warranty.

Express warranties may not truly be disclaimed. Once made, the warranty is effective (e.g., after a statement that a watch was made in Switzerland, a statement that "any warranty of origin is disclaimed" is ineffective). However, limitation on the warranty is possible so long as the limitation is reasonable and consistent with the warranty (e.g., after a statement that the watch will run underwater, a statement that the watch will only run at a depth of less than 50 feet of water is effective).²⁰

Usually, the warranties that can be effectively disclaimed are implied warranties and specifically the warranties of merchantability and fitness for a particular purpose. These two implied warranties may be disclaimed by a statement such as "as is," "with all faults," or similar language.²¹ Otherwise, the disclaimer must generally be in writing and conspicuous.²² It should state explicitly the warranty being disclaimed unless it disclaims all implied warranties.²³ In order to disclaim the warranty of title, the seller or the circumstances must let the buyer know that the seller does not claim to have title to the goods being sold or is only selling whatever title he or she has.²⁴

Implied warranties on consumer products may not be disclaimed if the seller makes a written warranty or provides a service contract on the product to the consumer.²⁵

Remedies

If a warranty is breached, the buyer is entitled to recover the difference between the value of the goods accepted and the value they would have had if they had been as warranted, unless the remedy is modified by contract (as discussed below). In other words, the remedy is the difference between the value of the goods received and the goods that were supposed to be received.²⁶ The buyer may also recover incidental and consequential costs, which are additional costs that can be reasonably expected to follow from receiving inadequate goods.²⁷ These costs include shipping, storage and upkeep costs, as well as any other damage the seller has reason to know could result from a breach of warranty.²⁸ Some defective items can cause extensive but foreseeable damage far beyond the value of the item itself, such as exploding tires or leaky gas ovens. The damage they produce is recoverable so long as the seller has reason to know it may occur.

Modification of Remedies

The default remedy for a breach of warranty does not exist in every case: parties may contractually modify the remedy by agreement. For example, the parties may agree that if the product fails, the buyer is entitled to a replacement instead of a dollar sum. The remedies for breach of warranty may be modified or limited in almost any way so long as both parties agree.²⁹ Limitations on the damages for breach of warranty are very common. However, if the limitation is so significant that the remedy fails of its essential purpose then it is ineffective. In other words, if the limitation is so strict that the warranty becomes meaningless, then the limitation is ignored. Remedies for the consequences of breach, such as personal injury from defective goods, may be limited so long as the limitation is not unconscionable.³⁰

The contract may also fix the amount of damages recoverable for any breach with what is called a "liquidated damages clause."³¹ These clauses can save the parties the difficulty of fighting over the amount of damages by agreeing beforehand. The amount agreed upon must be reasonably related to the expected harm from the breach and the difficulty in proving and suing for the breach.

Federal Warranty Disclosures

15 U.S.C. 2303(a) & 2304

Federal law requires that written warranties on consumer products provide for clear disclosure of whether a written warranty is full or limited. A full warranty guarantees that if a product is found to be defective within the warranty period, the purchase will be repaired, replaced or refunded at no cost. A full warranty does not limit the duration of implied warranties, provides coverage to anyone who owns the product during the warranty period (not just the first purchaser) and does not require the consumer to perform any duty as a precondition for receiving service, except notifying the warrantor that service is needed. If any of these conditions is not true - - for example, if the warranty does not cover certain defects, only covers parts but not labor, or only covers the first purchaser - - then the warranty is "limited."

Additionally, consumer products costing more than $15 with a written warranty must clearly and conspicuously disclose in a single document, in simple and readily understood language, all of the important terms of the warranty, how it operates and the procedure in case of a breach.³² The terms of the warranty must be made readily available to the buyer before the purchase as well.³³

Advertisements that use terms like "Satisfaction Guarantee," "Money Back Guarantee," "Free Trial Offer" or similar language must refund the full purchase price of the product at the purchaser's request.³⁴ Use of the term "lifetime" in a warranty must be clear as to what "life" it refers.³⁵ ("Lifetime" might refer to the life of the buyer, the usual life of the product, or the life of a related product, such as a car. Use of the term "lifetime" can be very misleading, particularly when the warranty actually only lasts for a fixed period of time, as when the "life" is the usual life of the product.)

Getting Warranty Service

If there is a written warranty, read it first. The terms of your agreement are essential because they are almost always controlling. As discussed above under Modification of Remedies, even if the warranty has been breached, the remedy for breach may be dramatically altered by contract.

Next, contact the warrantor. Write to the entity that issued the warranty. Your warranty should list the appropriate contact and that company's mailing address. Send all letters by certified mail and save correspondence for future reference.

Contact your state or local consumer protection office if you are unable to resolve the situation yourself. See the appendix to this Consumer Law Help Manual for contact information.

If your complaint relates to a new or used car covered by the Lemon Law, you have the choice of either participating in an arbitration program or suing the manufacturer directly in court. See the Automobile section of this Consumer Law Help Manual.

Sue in Small Claims Court if your dispute involves less than $5,000. You don't need an attorney to sue in this informal court. For further information, visit the online Guide to Small Claims Court, available at http://www.courts.state.ny.us/ithaca/city/webpageguidetosmallclaims.html. In addition, the clerk of your local Small Claims Court can provide guidance on how to file your lawsuit.

Finally, if all else fails, contact a lawyer for advice on how to proceed.

U.C.C. 2-313-14. ↑
Whenever an art merchant sells or exchanges fine art to someone who is not an art merchant and provides a certificate of authenticity, the certificate creates an express warranty. Art and Cultural Affairs Law 13.01, 13.05, 15.11. ↑
U.C.C. 2-312; 2-A-211. ↑
U.C.C. 2-312; 2-A-211. ↑
U.C.C. 2-314; 2-A-212. ↑
U.C.C. 2-315; 2-A-213. ↑
General Business Law 777-a. ↑
Social Services Law 461-C. ↑
Real Property Law 235-b; http://www.ag.ny.gov/bureaus/real_estate_finance/pdfs/tenants_rights_guide.pdf ↑
General Business Law 617 & 619. ↑
General Business Law 697-a. ↑
General Business Law 720, 722-24. ↑
Executive Law 603. ↑
19 NYCRR 1210.16. ↑
General Business Law 349-B. ↑
General Business Law 731-32. ↑
General Business Law 670. ↑
U.C.C. 3-417, 4-207, 7-507. ↑
Energy Law 12-106. ↑
U.C.C. 2-316(1). ↑
U.C.C. 2-316(3)(a). ↑
U.C.C. 2-316(2). ↑
See id. ↑
U.C.C. 2-312. ↑
15 U.S.C. 2308. ↑
U.C.C. 2-714(2). ↑
U.C.C. 2-714(3) & 2-715. ↑
U.C.C. 2-715. ↑
U.C.C. 2-719. ↑
U.C.C. 2-719(3). ↑
U.C.C. 2-718(1). ↑
16 C.F.R. 701.2-3. ↑
16 CFR 702. ↑
16 CFR 239.3. ↑
16 CFR 239.4. ↑