Warranty

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.

BREAKING DOWN '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. Consumer Staples

    Essential products such as food, beverages, tobacco and household ...
  2. Implied Warranty

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

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

    A little-known, but common feature offered by most credit card ...
  5. Premium

    1. The total cost of an option. 2. The difference between the ...
  6. Cardboard Box Index

    An index used by some investors to gauge industrial production ...
Related Articles
  1. Insurance

    Understanding Your Insurance Contract

    Learn how to read one of the most important documents you own.
  2. Insurance

    15 Insurance Policies You Don't Need

    Learn how to save money by saying "no" to unnecessary coverage.
  3. Home & Auto

    Did You Buy A Lemon?

    Find out how to fix a sour deal on your car purchase.
  4. Budgeting

    Extended Warranties: Should You Take The Bait?

    Avoid shelling out for these policies and you could save hundreds of dollars.
  5. Economics

    What is a Complement?

    A good or service that’s used in conjunction with another good or service is a complement.
  6. Investing News

    Chipotle Served with Criminal Probe

    Chipotle's beat muted expectations and got a clear bill from the CDC, but it now appears that an investigation into its E.coli breakout has expanded.
  7. Stock Analysis

    From Shampoo to Soup, Unilever Has it Covered (UL)

    Open your fridge, your pantry, your bathroom cabinet and you'll find the Unilever logo. Here's how the company got so enormous.
  8. Stock Analysis

    JNJ vs. PG: Which is the Better Bet Right Now?

    These two stocks are long-term powerhouses, but one has the edge over the other right now.
  9. Stock Analysis

    The Top 5 Small Cap Restaurant Stocks for 2016 (BLMN,DENN)

    Learn about the market conditions that could help continue pushing restaurant stocks higher in 2016 and the five small-cap restaurants that are worth a look.
  10. Economics

    Why Commodities Aren't to Blame for Market Malaise

    Commodities are taking the brunt of the blame for poor investment performance. Are they the real villain?
RELATED FAQS
  1. Why does the term OEM have two opposite meanings?

    It is an accident of history that the term original equipment manufacturer, or OEM, changed over time to mean something very ... Read Full Answer >>
  2. What is prime cost in managerial accounting?

    In managerial accounting, prime cost is the sum of direct costs needed to make a product and includes direct materials, direct ... Read Full Answer >>
  3. How important are contingent liabilities in an audit?

    Contingent liabilities, when present, are very important audit items because they normally represent risks that are easily ... Read Full Answer >>
  4. What are some examples of companies that are Value-Added Resellers?

    Among the most common value-added resellers are computer retailers and service companies, automobile dealerships and furniture ... Read Full Answer >>
  5. Marginal propensity to Consume (MPC) Vs. Save (MPS)

    Historically, because people in the United States have shown a higher propensity to consume, this is likely the more important ... Read Full Answer >>
  6. Is Japan an emerging market economy?

    Japan is not an emerging market economy. Emerging market economies are characterized by low per capita incomes, poor infrastructure ... Read Full Answer >>
Hot Definitions
  1. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  2. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  3. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
  4. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
  5. Discouraged Worker

    A person who is eligible for employment and is able to work, but is currently unemployed and has not attempted to find employment ...
  6. Ponzimonium

    After Bernard Madoff's $65 billion Ponzi scheme was revealed, many new (smaller-scale) Ponzi schemers became exposed. Ponzimonium ...
Trading Center