Warranty

AAA

DEFINITION of 'Warranty'

A type of guarantee that a manufacturer or similar party makes regarding the condition of its product. It also refers to the terms and situations in which repairs or exchanges will be made in the event that the product does not function as originally described or intended.

INVESTOPEDIA EXPLAINS 'Warranty'

Warranties usually have exceptions that limit the conditions in which a manufacturer will be obligated to rectify a problem. For example, many warranties for common household items only cover the product for up to one year from the date of purchase and usually only if the product in question contains problems resulting from defective parts or workmanship.

As a result of these limited manufacturer warranties, many vendors offer extended warranties. These extended warranties are essentially insurance policies for products that consumers pay for up front. Coverage will usually last for a handful of years above and beyond the manufacturer's warranty and is often more lenient in terms of limited terms and conditions.

RELATED TERMS
  1. Implied Warranty

    Under a sales contract, whether written or oral, there is a guarantee ...
  2. Return Protection

    A common, but little-known credit card perk allowing cardholders ...
  3. Price Protection

    A little-known, but common feature offered by most credit card ...
  4. Cardboard Box Index

    An index used by some investors to gauge industrial production ...
  5. Consumer Staples

    Essential products such as food, beverages, tobacco and household ...
  6. Premium

    1. The total cost of an option. 2. The difference between the ...
Related Articles
  1. Understanding Your Insurance Contract
    Insurance

    Understanding Your Insurance Contract

  2. 15 Insurance Policies You Don't Need
    Insurance

    15 Insurance Policies You Don't Need

  3. Did You Buy A Lemon?
    Home & Auto

    Did You Buy A Lemon?

  4. Extended Warranties: Should You Take ...
    Budgeting

    Extended Warranties: Should You Take ...

comments powered by Disqus
Hot Definitions
  1. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  2. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  3. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  4. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  5. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  6. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
Trading Center