warranties

(noun)

In business and legal transactions, a warranty is an assurance by one party to the other party that specific facts or conditions are true or will happen. The other party is permitted to rely on that assurance and seek some type of remedy if it is not true or followed.

Related Terms

Examples of warranties in the following topics:

  • Product Warranties

    • AppleCare, shown here, is the hardware warranty and support service offered by Apple Inc.
    • Warranty: Warranties are used to mitigate the risks of a malfunctioning product or the risk of making a wrong purchase decision regarding misinformation about a product.
    • These warranties can provide a wide array of restitution, with a very limited warranty at one end of the continuum and extended warranties at the other.
    • A good jewelry store has a warranty backing up every diamond ring it sells.
    • In this case, sellers should honor the warranty by offering a refund or a replacement.

  • Remanufacturing (to as-good-as-new condition)

    • The term ‘sound working condition' is key because in some areas of the world, reassembled products made from used parts are considered new and come with the same guarantee and warranty as products made from virgin raw materials.
    • Conversely, in other regions, remanufactured (or refurbished) products must be labelled as such by law even if they carry the same warranty.

  • Developing Services

    • Moreover, behind every product is a series of supporting services, such as warranties and money-back guarantees.
    • Warranty: There are several types of durable products, retail stores, and even service products where warranties are expected.
    • These warranties can provide a wide array of restitution, with a very limited warranty at one end of the continuum and extended warranties at the other.
    • Money-back guarantees: The ultimate warranty is the money-back guarantee.

  • The "Do Anything" Licenses

    • It is the simplest of several minimal licenses that do little more than assert nominal copyright (without actually restricting copying) and specify that the code comes with no warranty.

  • Reporting Contingencies

    • For example, to accrue a provision for product warranty costs, assume that minor repairs cost 5% of the total product sales and an estimated 5% of products may require minor repairs within 1 year of sale.
    • A warranty expense is debited for the provision amount that will offset product sales revenue in the income statement and a credit is posted to warranty provision liability.
    • As the warranty claims are made, the liability account is debited and cash is credited for the cost of the repair.
    • The long-term liability warranty provision is moved to the current liability section in the accounting period occurring three years after the product sale.

  • Special topic: just-in-time and lean systems

    • waste from product and service defects (rework, scrap, warranty, etc. )

  • Balance Sheets

    • Contingent liabilities, such as warranties, are noted in the footnotes to the balance sheet.

  • Classifying Liabilities

    • These usually include issued long-term bonds, notes payables, long-term leases, pension obligations, and long-term product warranties.

  • Evaluating Alternatives

    • When a consumer commits significant time to the comparative process and reviews price, warranties, terms and condition of sale and other features it is said that they are involved in extended problem solving.

  • Liabilities

    • They usually include issued long-term bonds, notes payables, long-term leases, pension obligations, and long-term product warranties.