Enterprise IT Watch Blog

Sep 21 2009   11:05AM GMT

Buy that extended hardware warranty at your own peril

Guest Author Profile: Guest Author

Editor’s Note: Last week, we saw how tablet warranties could go awry, with one IT administrator stuck with the shipping tab when her tablets went wonky. Joshua Garick, a lawyer in Boston, MA., offered to share a few more reasons why IT administrators should think twice before buying that extended warranty. -MM

Warranties are often marketed as a way to provide peace of mind that you can be made whole in the event your purchase is defective. The reality, however, is that warranties are often cash cows for merchants who prey on risk adverse and legal un-savvy buyers. Most sales of tangible goods actually come with implied warranties whether or not the merchant or the manufacturer discloses their existence.  As a result, it may be the case that you’re better off not purchasing elective warranties.

The sale of goods was historically governed by the caveat emptor doctrine – let the buyer beware.  If a product was defective, the buyer had no recourse against a merchant.  In modern times, most states have enacted consumer protection and warranty laws aimed at leveling the playing field.  Some examples include:

If they promise you the world, you might have a legal right to make them deliver, or at least refund your money.

  • Implied Warranty of Merchantability: The sale of a good carries an implied warranty that the good is merchantable.  This means that the good is of fair average quality, is fit for the ordinary purpose for which the good is to be used, conforms to the promises of fact made on any labels, or would otherwise pass without objection based on industry standards.
  • Implied Warranty of Fitness for a Particular Purpose: The easiest way to describe this warranty is that you get what you ask for. If you inform a merchant that you are purchasing an item for a particular purpose, and the sale is premised on this special request, the merchant has impliedly warranted that the product he sells you will be fit for that particular purpose. For example, if you tell a car dealer that you need a truck capable of towing, there is a breach of warranty if the truck he sold you is incapable of meeting this purpose – even if the truck is otherwise operable and merchantable.
  • Warranties by Affirmation:  In its simplest form, this is a warranty that you get what you are told you are getting. An express warranty is created when a merchant makes a statement of fact or a promise relating to the sale. Because you relied on this promise and made a purchased based on such representations, there is a warranty that the goods will conform to the promise made by the merchant. For example, if a merchant tells you they are selling you a 2005 Honda Accord, there is now a warranty that the car is actually a 2005 Honda Accord.

If a product is sold in breach of any of these warranties, the merchant is required by law to repair the product, replace the product or refund the purchase price for the product, all at their own cost. Thus, these warranties (as well as other consumer protection statutes) provide valuable tools to combat abuse.  And the best part is these warranties are free of charge.

Merchants, however, can limit or even waive these implied warranties under the right circumstances.  For example, if you purchase an item and the seller indicates in the bill of sale that it is sold “as is,” or “with all faults,” this constitutes a waiver of all warranties.  In such a situation, the buyer should beware that he will be liable if the good is defective. A merchant may also waive implied warranties by indicating so, in writing, in an obvious or conspicuous manner (i.e., it cannot be hidden in the fine print).

More importantly, when you purchases an optional warranty such as an extended warranty, you may do so at the expense of the full protections provided by statutory warranties. For example, an extended warranty may provide only a few years of coverage; it may require the buyer to bear some costs (i.e., the cost for shipping to a repair center); or it may provide warranties against flaws in workmanship and construction only, while disclaiming all implied warranties. In these cases, a buyer may be in a better position if he declines to purchase the extended warranty because he is afforded full protection of the warranties provided by law – not just the provisions the merchant decides to offer its customers.

This is not to suggest that all extended warranties are bad investment or that they always disclaim implied warranties.  Like any contract, it is important to read the small print to understand the terms of a merchant’s warranty. Similarly, since consumer protection and warranty laws vary by state, it is important to understand the legal landscape in your jurisdiction to learn of your legal alternatives.  Though seemingly a daunting task, there is a wealth of information available online, from attorneys, from the Federal Trade Commission and similar state agencies, from your state attorney general’s office, and from consumer advocacy agencies.

Joshua N. Garick, Esq. is a graduate of Cornell University and Suffolk Law School. He is an attorney licensed to practice law in the Commonwealth of Massachusetts, and focuses his practice on all areas of civil litigation. He can be reached at jgarick@gmail.com.

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  • IT Professionals are not above the law - Enterprise IT Watch Blog
    [...] a bit dubious about what the boss is snooping on. Also, read his first guest post on why you should be wary of extended warranties. -Michael [...]
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