Guarantee vs. Warranty: The Difference

This article discusses the difference between warranty and guarantee. Though most companies these days only give a warranty over their products, it is useful to understand the distinction.

What is a Guarantee?

A guarantee is a promise made by a seller or manufacturer to a buyer that the item / service / product sold is of the best quality and in the event that the buyer is not satisfied or if the said item / service / product does not live up to this promise, the seller agrees to replace it or refund the buyer’s money.

A guarantee provides extra protection, over and above the buyer’s existing legal right or any other additional rights against the seller. It is always free, which means that even if a buyer does not pay for the guarantee, or it is offered free of cost by a seller, it is legally binding on the guarantor. A guarantor cannot refuse to provide a copy of the guarantee if you insist on one.

In Rahgava Menon vs. Kuttappan Nair, where the terms of the guarantee certificate provided-”This is to certify that the undermentioned Kenson Watch which has been sold this day is guaranteed for a period of One Year, unless unfairly used or damaged by accident, water or perspiration”, the Kerela High Court held that such a guarantee does contemplate replacement as well and not merely servicing and repairing.

What is a warranty?

A warranty is a guarantee of repair and replacement of an item / product or its parts if the product or service does not meet the reasonable expectations of a buyer or in case any defect is found in it during the period of the warranty. This is also called an ‘extended guarantee’.

A warranty works like a legal contract and is always binding, which means that it can subject the seller to lawsuits if they do not comply with their promise (i.e. repairing and replacing of articles or any of its parts). It takes effect only at the termination of any guarantee already being provided by the manufacturer.

A warranty can be limited by the terms of the contract. Such a limited warranty put conditions on the parts of an article, the nature of damage incurred and the time period of validity of the document.

What is the difference between a guarantee and a warranty?

A guarantee is basically a commitment on the part of the guarantor to make good any defects in a product or a service during a fixed period while a warranty mainly pertains to the repairing of an article or replacing a defective part of an article within the validity period.

One key difference between a guarantee and a warranty is that unlike a guarantee which is always free, you will need to pay for a warranty to avail the benefit.

The second important difference is that unlike a guarantee which is provided by the manufacturer, a warranty is usually provided by the retail sellers or distributors.

Consider the following statement: “This laptop has a 60-day money-back guarantee and a 2-year warranty.” It means that if the laptop is defective or does not provide the assured standard you can return it within 60 days and get your money back. However, you can also return it for repair or replacement of one of its parts if any defect arises within the 2-year warranty period.

Things to consider before you rely upon a Guarantee/Warranty

A buyer must ensure that-

  • The guarantee/warranty mentions how long it will last, and the name and address of the seller.
  • The terms of the guarantee/warranty are clear and unambiguous.
  • If a guarantee/warranty is provided for a longer term such as 8 years or more, this should be supported by insurance as well because without it such a guarantee may be of limited value.

Can a relief be provided even after the expiry of the warranty period?

Yes. As mentioned earlier, guarantees and warranties provide extra protection, over and above the buyer’s existing legal right or any other additional rights against the seller. Therefore, a buyer is not left with remedy just because the guarantee/warranty period is over and he/she may resort to their rights under consumer protection laws, etc.

The situation in the case of M/s Base Corporation Ltd v. M/s Malhotra Auto Centre & Anr is an example of a case where there was ambiguity in the date of termination of the warranty. Here, one of the defendants provided battery base terminals having a warranty of 2 years from the date of purchase. The terminal became defective within a period of six months of the date of sale. When the complainant asked for a replacement terminal, he was denied this on the ground that warranty period of the battery has expired. It was found that the defendant had fraudulently concealed the fact that the actual date of warranty period starts from either the date of sale (28.6.2009 here) or from 121stday of dispatch (14.7.2008 here), whichever is earlier. The State Commission held that the defendant indulged in unfair trade practice by supplying old outdated goods to the complainant and hence must refund the price paid, along with the compensation and cost of litigation.

Dr. Subhash Chandra Pratihar v. Capital Electronics is another recent case on this point. Here, a complaint was filed for the first time with defendant after the expiry of the warranty period for a defective laptop provided by Lenovo India Pvt. Ltd. It was argued by the defendant that since the complaint was lodged after the expiry of the period of the warranty, he is under no obligation to provide any service to the complainant and/or to remove the defects and/or to correct the problems in the laptop. Rejecting this contention of the defendant, the State Commission held that, since neither the defendant or Lenovo India Pvt. Ltd. Had denied that the defects in the said laptop developed within the warranty period and sold laptop was defective, the defendant, having sold such defective laptop was under legal obligation to render proper service to the complainant by removing all such defects from the said laptop so as to make it useable by the complainant.

When is relief not provided?

If satisfactory after-sales service has been provided by the opposite party

The court in Kelvinator of India Ltd. & ors v. Unknown denied the plaintiff any relief in the form of replacement of the refrigerator as satisfactory after-sales service had been provided by the respondents under the warranty agreement.

If a consumer fail to adduce expert evidence as to the manufacturing defect in a vehicle purchased.

The West Bengal State Commission in Mahindra & Mahindra v. Md. Farhad Hssain & Anr., referred to the judgement of National Commission, reported in 2006 (3) CPR 336 (NC) and denied the plaintiff’s plea for replacement of the car or refund of its price as the Appellant failed to prove the alleged manufacturing defect in the purchased car by adducing any expert opinion.

Another recent case is Sri. Arun Maheshwari v. M/s Krishna Traders & Ors.. In this case, the State Commission denied the complainant’s claim for refund of the cost a motorcycle along with expenditures incurred by him in repairing. The commission relying upon several judgments of the National Commission made it very clear that no remedy can be provided to a complainant if he fails to adduce any evidence either oral or documentary or from any expert to prove his allegation as to inherent manufacturing defect in a vehicle.

How does the rule of caveat emptor apply to guarantee/warranty?

Caveat emptor literally means “buyer beware”. In other words, the buyer takes the risk as to the quality and condition of the goods he/she buys. A guarantee certificate protects a buyer in such conditions. Apart from this, Section 16 of the Indian Sale of Goods Act provides three more exceptions to the rule of caveat emptor so as to provide additional protection to a buyer, even if there is no warranty/guarantee given by the seller:

  • Sub-section (i) of Section IB, of the Act provides that, if the buyer, relying on the seller’s skill or judgment, tells the seller the particular purpose for which he requires the goods and the goods are of a description which the seller deals in, then there is an implied condition that the goods shall be reasonably fit for such purpose. However, if the product or item is one specified under its patent or other trade name, then there is no implied condition as to its fitness for any particular purpose.
  • The second exception provides that if the goods are bought by description from a seller, who deals in goods of that kind, then there is an implied condition that the goods shall be of merchantable quality. However, if the buyer has examined the goods himself, there shall be no implied condition as regards defects which such examination ought to have revealed.
  • The last exception to the rule of caveat emptor is that, if in a particular trade, an implied warranty or condition as to quality or fitness for a particular purpose is automatically implied by the usage of the trade itself.

Is it necessary that to avail the protection under guarantee/ warranty, the seller must be an authorized dealer?

No, it is not necessary that the seller must be an authorized dealer for you to avail the benefit of the guarantee. In the case of Prabir Chandra Mohapatra v. Sabyasachi Jena, Chairman, Nokia India Pvt. Ltd, the State consumer dispute redressal commission ordered a local dealer to refund of the cost of the defective Nokia mobile set along with compensation and cost of litigation even though he was not an authorized dealer of Nokia nor did he have an authorized service centre.

 

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6 total comments on this postSubmit yours
  1. Very useful article. Thanks a lot!

  2. Thanks Venkat!

  3. lucid and apt!

  4. Before 1947 we have freedom movement, we have been free people today. Now we have people like you, we are free consumers today. Why should not we honour you for your selfless deed. You are equated with Ralph Nader of USA, who is the father of consumer awareness forum. A sight difference between you and Nader is,on hearing that the case is gone to the knowledge of Nader,the trader immediately oblige to the consumer and the court ruled in favour of the consumer bY dismissing the case. Such is the kind of consumerism he evolved and nurtured. Thank you. I’ll put my finger on your site every time.

  5. excellent service

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