Don't you breathe a sigh of relief when you find that an item you've purchased is still under warranty? It's a small thing that businesses can do to increase customer satisfaction and peace of mind. In fact, American companies only spend about two percent of their revenue on warranty claims, but having a warranty pays dividends in terms of consumer confidence.

A warranty is a written guarantee of a product and the maker's responsibility for repairing or replacing parts due to defect. It promises that you will stand behind your product or your work. Warranties are especially important for big-ticket items such as electronics, cars or homes, but warranties on smaller items could mean the difference between making a sale or losing it.

When considering offering a warranty for a product or service, think about the following points.

1. Get any warranties in writing. Verbal warranties don't have protection under the law.

2. Make sure you write the warranty in clear language so that the consumer can understand completely.

3. Follow up on warranty claims in a timely manner, which will increase customer satisfaction.

Action Steps
The best contacts and resources to help you get it done

Understand warranty law in the United States

There are several different kinds of warranties in the law. The federal Magnuson-Moss Warranty Act spells out warranty information in the United States.

I recommend: Every consumer product, regardless of other warranties, carries an implied warranty of merchantability, meaning the product is fit to be sold, as well as an implied warranty of fitness, meaning that the product can do what you say it can do. In addition, you can offer an express warranty, a voluntary written promise. Refer to the Uniform Commercial Code, section 2-313, for legal help in regard to express warranties for businesses. The Federal Trade Commission's Businessperson's Guide to Federal Warranty Law will help you find warranty information for your products and explains the Magnuson-Moss Warranty Act.

Develop your product warranty with the help of a lawyer

If you're going to develop a product and offer a warranty, you'll need to make sure that you have legal protection. Consult a law firm with plenty of experience in contract law and warranty litigation.

I recommend: Anderson Glenn, LLC, is a top warranty law firm in Florida. Terra Law, LLC, with several locations in California, can advise its clients on corporate warranty law.

Guarantee new construction with a home warranty

Construction warranties are an important part of building. Even the best-built homes will have issues after construction is complete.

I recommend: Most home builders offer a one-year warranty from the move-in date. You should spell things out completely in the contract to cover the homeowner and the builder. You should also look into offering an extended warranty to cover appliances and other systems such as heating and plumbing. Purchase construction warranty forms from the warranty list at TheContractorsGroup.com. Liberty Home Protection is a warranty provider that offers a bonus to builders selling their home warranty to consumers.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Have a lawyer read over any warranties to make sure the document is legal and that you do not expose yourself to additional liability.