What is an 'Express Warranty'

An express warranty is an agreement between the contract seller (dealer, manufacturer or independent company) and the buyer of a product to provide repair or replacement for covered components of the product for some specified time period. An express warranty is a seller's promise or guarantee that a buyer relies on when they purchase an item. Under the federal Magnuson-Moss Warranty Act, a company must provide a written express warranty if a product is sold for more than $15.

BREAKING DOWN 'Express Warranty'

The warranty is an assurance that the item will live up to the promises of the seller. For example, the warranty can say something like, "We guarantee all furniture against defects in construction for one year. When a structural defect is brought to our attention, we will repair or replace it." Most express warranties come from the manufacturer or are included in the seller’s contract. It can also be created by a simple statement on an advertisement or a sign in the store.

How Coverage Is Outlined by an Express Warranty

The details about a product or service that are outlined in an advertisement can set the precedent for an express warranty. Claims made in advertisements about the quality, functionality, lifespan and efficacy of a product can constitute an express warranty. If the product does not meet the standards set forth in the advertising or suffers a breakdown within a set timeframe, the customer may be entitled to free repair service or a full replacement where possible.

E-commerce companies typically include express warranties on the goods they sell in part because of the nature of how online shopping is conducted. The customer cannot try on or physically examine merchandise they are about to purchase. How the product functions and looks when it is received can dramatically differ from what they customer envisioned while browsing online. The inclusion of an express warranty gives them some sense of surety that issues with the purchase will be rectified in some manner.

So if a consumer buys a business jacket online, but when it arrives the item is the wrong size, wrong color, or is missing buttons an express warranty might entitle the consumer to a refund or replacement.

Auto dealers tend to advertise express warranty terms for repairs on the vehicles they sell. This can include stipulations on mileage and length of ownership that limit the extent of that coverage. After the vehicle is owned a certain amount of time or driven beyond the mileage limit, the express warranty would no longer be applicable.

RELATED TERMS
  1. Home Warranty

    A home warranty is a residential service contract that covers ...
  2. Warranty of Title

    A guarantee by a seller to a buyer that the seller has the right ...
  3. Special Warranty Deed

    A special warranty deed is a deed in which the seller warrants ...
  4. Contingent Liability

    A contingent liability is a liability that may occur depending ...
  5. Industry Loss Warranty

    Industry loss warranty is an insurance or reinsurance contract ...
  6. Advertised Price

    An advertised price is the price of a product or service as displayed ...
Related Articles
  1. Managing Wealth

    Everything You Need To Know About Warranties

    Warranties are often considered when purchasing gifts. When should you purchase warranties and for what?
  2. Insights

    Volkswagen Offers 6-Year Warranty to Win Back U.S. Customers

    It's the best warranty in the business, but you only get it on two new SUV models.
  3. Investing

    3 High-Pressure Home Improvement Sales Tactics

    Vendors selling products related to the improvement of your home can be some of the most challenging salespeople to deal with.
  4. Investing

    Fix Or Replace: Thinking Ahead On Home Repairs

    When something breaks, how do you decide whether to fix it or throw it away? We provide some tips.
  5. Retirement

    Is It Worth Buying a New Car If You're Already Retired?

    You have to consider more than just the purchase price: Insurance, the warranty, resale value and how much you plan to drive are all important factors.
  6. Managing Wealth

    Did You Buy A Lemon?

    Find out how to fix a sour deal on your car purchase.
  7. Financial Advisor

    American Express: Headwinds and Tailwinds

    Any investors considering a position in American Express need to know these important facts.
  8. Investing

    What Drives American Express in 2017?

    American Express surprised the market in 2016 with the rate at which its business improved.
  9. Personal Finance

    Surprising Credit Card Benefits

    If you didn't read the fine print, you could be missing out on these free credit card benefits.
  10. Investing

    Why American Express Stock Surged 12% (AXP, COST)

    American Express Company, which saw its stock soar 12% last week, has begun to earn credit for its operational improvements.
RELATED FAQS
  1. What do the letters / symbols on credit ratings mean?

    Learn about the numbers, letters and symbols used to express credit ratings and credit scores. Understand what these symbols ... Read Answer >>
  2. Is real GDP a better index of economic performance than GDP?

    Learn why real GDP is a better index for expressing the output of an economy, as it takes into account the factors that distort ... Read Answer >>
  3. Here's What Short Sellers Must Do to Short a Stock

    Learn what benefits a short seller is required to make up to the lender of shares, or long investor, when shorting a stock ... Read Answer >>
Hot Definitions
  1. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
  2. Intrinsic Value

    Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
  3. Current Assets

    Current assets is a balance sheet item that represents the value of all assets that can reasonably expected to be converted ...
  4. Volatility

    Volatility measures how much the price of a security, derivative, or index fluctuates.
  5. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
  6. Cost of Debt

    Cost of debt is the effective rate that a company pays on its current debt as part of its capital structure.
Trading Center