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Contracts and Warranties Basics

Legal Disclaimer: The following is basic legal information, provided as a public service by Wyoming’s lawyers. The information provided is not a substitute for speaking to an attorney. Only an attorney can give you legal advice regarding your specific situation. Click here for help finding a lawyer.

Contracts
 

Warranties
 

What is a contract?

A contract is an agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law.

How do I form a contract?

A contract is formed when there is an offer, acceptance of the offer, and consideration.

What is an offer?

An offer is a statement that one is willing to do something for another person or to give that person something.

What is acceptance?

Acceptance is an offeree's assent, either by express act or by implication from conduct, to the terms of an offer in a manner authorized or requested by the offeror, so that a binding contract is formed.  If an acceptance modifies the terms or adds new ones, it generally operates as a counteroffer.

What is consideration?

Consideration is something bargained for and received by a promisor from a promisee.

What is a promisor?

A  promisor is someone who makes a promise.  In contracts, a promisor is a person or party that agrees to an obligation.

What is a promisee?

A promisee is someone to whom a promise is made.

What is an obligation?

An obligation is a legal duty to do or not do something.

What is breach of contract?

A breach of contract is a violation of a contractual obligation by failing to perform one's own promise, by repudiating it, or by interfering with another party's performance.

What is a void contract?

A void contract has no legal effect, so that there is really no contract in existence at all.  A contract may be void because it is technically defective, contrary to public policy, or illegal.

Does a contract need to be in writing?

Most contracts can be either written or oral and still be legally enforceable, but some agreements must be in writing in order to be binding. However, oral contracts are very difficult to enforce because there is no clear record of the offer, acceptance, and consideration.  Therefore, it is good practice to have the terms of a contract in writing, signed by all parties involved.

What is an express warranty?

An express warranty is an oral or written statement that guarantees that a product is of a certain quality or will work in a certain way or for a certain amount of time. Most express warranties say something like, "This product is warranted against defects in materials or workmanship" or "We will repair or replace parts that are defective in materials or workmanship" for a specified time.

You are not automatically entitled to an express warranty. Most express warranties either come directly from the manufacturer or are included in the sales contract you sign with the seller. However, an express warranty might also be a feature in an advertisement or on a sign in the store—for example, "all dresses 100% silk"—or it may be an oral description of a product's features that you rely on in making your purchasing decision.

What is an implied warranty?

There are two types of implied warranties: the implied warranty of merchantability and the implied warranty of fitness. Virtually every consumer product you buy comes with an implied warranty of merchantability. This is an assurance that a new item will work if you use it for a reasonably expected purpose. For used items, the warranty of merchantability is a promise that the product will work as expected, given its age and condition.

The implied warranty of fitness applies when you buy an item with a specific (even unusual) purpose in mind. If you relate your specific needs to the seller, and the seller assists you in selecting the item, the implied warranty of fitness assures you that the item will fill your need. For instance, if you tell a retailer that you need a sleeping bag for sub-zero weather and the retailer sells you such as bag, it comes with an implied warranty that the sleeping bag will keep you warm in sub-zero temperatures.

In certain states, an implied warranty lasts for four years. In some states, however, the implied warranty lasts only as long as any express warranty that comes with a product. (To find out the law where you live, talk to an attorney.)

Sellers sometimes try to avoid implied warranties by selling a product "as is." In order to effectively negate implied warranties, however, the seller must follow state law requirements. For example, some states require that the disclaimer be in writing and the language be obvious. A few states don't permit "as is" sales. Also, implied warranties can't be disclaimed when there is an express written warranty that comes with the product.

Can I file a lawsuit if something is wrong with what I bought?

After you purchase an item with a written warranty, if you find that the product is defective, you may file a suit against the warrantor (the person or company that made the warranty). You'll first have to “exhaust” your warranty remedies though. Under most circumstances, this means that you've tried (but not succeeded) at taking advantage of your remedies, which could include getting a replacement, repair, or refund. If you prevail in your breach of warranty case in court, you can recover attorneys' fees and court costs.

Consider handling the suit yourself in small claims court or, if the matter is complicated or there's a lot of money at stake, consider hiring a lawyer to represent you in the suit.

Do I have any recourse if an item breaks after the warranty expires?

In most states, if the item gave you some trouble while it was under the warranty (and you had it repaired by someone authorized by the manufacturer to make repairs), the manufacturer must extend your original warranty for the amount of time the item sat in the shop. Call the manufacturer and ask to speak to the department that handles warranties.

If your product was trouble-free during the warranty period, the manufacturer may offer a free repair for a problem that arose after the warranty expired if the problem is a widespread one. Many manufacturers have secret fix-it lists—items with defects that don't affect safety and therefore don't require a recall, but that the manufacturer will repair for free. It can't hurt to call and ask.

Should I buy an extended warranty?

Probably not. Merchants encourage consumers to buy extended warranties (also called service contracts) when buying autos, appliances, or electronic items because these warranties are a source of big profits for stores, which pocket up to 50% of the amount you pay.

Rarely will you have the chance to exercise your rights under an extended warranty. Name-brand electronic equipment and appliances usually don't break down during the first few years (and if they do, they're covered by the original warranty), and often have a life span well beyond the length of the extended warranty.

Warranty info provided by Nolo.com