Guarantees and Warranties—Is There a Difference and Does it Matter?

100% Satisfaction Guarantee. You’ve read the phrase before, probably on a food product or maybe the packaging of a consumer electronics item. How does this “satisfaction guarantee” relate to the term “limited warranty” that consumers find familiar? While the terms “guarantee” and “warranty” may have become synonymous in the minds of some consumers, the two are actually quite different. Understanding the difference helps consumers know their rights and what remedies they are entitled to.

Much of the confusion starts with the fact that, at a fundamental level, both guarantees and warranties provide remedies to consumers who have an issue with a good they have purchased. Another similarity is that the offering party in both a guarantee and a warranty is legally bound to the terms of the agreement.

A basic distinction between guarantees and warranties is satisfaction as opposed to malfunction. Dissatisfaction with a product is not generally a circumstance that a warranty will cover. A guarantee on the other hand would generally provide a remedy for dissatisfaction. A manufacturer’s warranty is an assurance or stipulation given by a manufacturer against defects in the components and workmanship with a promise to cure any defects. In contrast, a guarantee is a promise that something is of specified quality, content, benefit, etc., or that it will perform satisfactorily for a given length of time. A warranty can be thought of as an insurance policy the purchaser has against the manufacturer for product defects for a certain period of time, while a guarantee is a promise of satisfaction offered to the purchaser. Warranties are more like a contract in which the manufacturer is promising quality and consistency in the product while guarantees can be more subjective to what an individual consumer hopes to get out of a product.

Perhaps an example can further clarify the difference. Consider Connie Consumer who buys a printer, which is manufactured by Perfunctory Printers. Perfunctory provides Connie with a warranty that the printer will print 100 pages per minute and guarantees that Connie will be happy with the printer’s ease of set-up and use. If Connie notices that her new printer only prints 99 pagers per minute, she could request that Perfunctory fix the printer so that it meets the warranted standard under the warranty. Instead, if the printer has an interface that Connie finds confusing and frustrating to use, under the guarantee she can return the printer for a full refund. Note that the warranty does not require Perfunctory to take the printer back, just to fix it. The guarantee, however, allows Connie to return the printer for a full refund on essentially a “no questions asked” basis.

Another distinction between guarantees and warranties is who provides each of them. As the name implies, a manufacturer’s warranty is always going to be provided by the manufacturer of the good. As discussed earlier an extended warranty could be provided by the manufacturer but more likely will take the form of a service contract provided by a third party seller. A guarantee could be offered by the manufacturer, the seller, or both. For a guarantee that is printed on the packaging of the product, the consumer should generally reach out to the manufacturer if they are dissatisfied with the product or good. However, some third-party sellers provide their own satisfaction guarantee in the form of allowing returns on products for a certain period of time.

The remedies that a warranty and a guarantee each provide can also be used to distinguish the two. In general, a warranty offers to repair malfunctioning or broken parts. However, not all warranties are created equal and in some cases a warranty may not provide for the repair of a defective part. Computers are a prime example of this where “Orange Computers” (Orange) might be the “manufacturer” of the computer and assemble everything, but the processor is actually made by another company, and the hard drive by a third company. In such a situation the warranty Orange provides may only cover the parts Orange itself manufactures and not the processor or hard drive. A warranty usually will not provide for full replacement unless multiple attempts have been made to fix the product to no avail. Thus it is always important to check the terms of the warranty to determine what actually is covered. A guarantee usually only offers the consumer replacement or refund on a product that the consumer is dissatisfied with or for a product that isn’t working properly. Thus, a warranty can be thought of as covering the individual parts or components of the product while the guarantee covers the product as a whole.  However, this will depend on the terms of the warranty or guarantee.

Warranties and guarantees are not necessarily free. The “costs” may be rolled into the price of the product, and warranties can often be extended by paying extra. Sometimes an “extended warranty” is offered by the manufacturer, but more often it is offered by the third-party seller of the good (retailer). Nonetheless, a guarantee may be essentially free when it is part of a free promotion for customer satisfaction. Thus, when a good comes with a guarantee the consumer can generally return the product and get a full refund on their purchase within the guarantee period. But once that guarantee period expires, if the consumer becomes dissatisfied they are likely out of luck. However, this is not always a hard and fast rule. Manufacturers and sellers both want to keep consumers happy and thus might refund a product outside of the stated guarantee period.

Understanding these differences can help consumers know where to look for a remedy if they are unsatisfied with a good they have purchased, or if the good malfunctions.

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