A good way to show you have faith in your product or service is to offer a guarantee or warranty. Guarantees and warranties can be powerful marketing tools in attracting customers. But you should be careful about what you promise as the law takes a dim view of businesses which don’t honour their warranties.

Whether you make or sell a product with a warranty or offer a service with a guarantee, you will need to make sure that your:

• product is fit for its purpose; or
• service is carried out with due care and skill and any materials supplied will be reasonably fit for the purpose for which they are supplied.

For example, it's no good selling a 2-door hatchback car with a five year warranty to a farmer who wants to use it to drive off-road. Equally, it is probably not very realistic to put a lifetime warranty on a toothbrush.

If you are a manufacturer, you must stand by your warranty and make sure spare parts are available. Think about the ways your product will be used and do some research on the return and repairs of similar products. If your competitors only offer small warranties, it could be for a reason. On the other hand, you may be seeking to position yourself in the market as a more reliable company by offering a longer warranty. Whatever you do though, it's best to follow the old business maxim ‘‘under promise, over deliver’’. This way customers won't have unrealistic expectations of the life and reliability of your product, but they will be pleasantly surprised if they do have to follow up a warranty.

If you provide a service, then any materials you supply must also be fit for any particular purpose for which the service is required or the result desired to be achieved and must be of a quality that will reasonably achieve that result.

Some industries are subject to specific statutory warranties. For example, as a builder you must give a seven year warranty on all building work performed including the material you used. In other words, you can't blame the manufacturer for faults. It is your responsibility to check the material before using it.

But remember as well, that even if you don't offer a warranty or guarantee, your product or service may have statutory warranty under the law. The law says that all products supplied to a consumer must be fit for the purpose for which they were supplied. There is no legal way you can avoid this responsibility.

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Guarantees, given in writing are known as voluntary (or express) warranties or conditions. These are a promise to correct certain problems that may occur after the customer has bought the product or received the service. For example, a new fridge warranty usually covers parts and labour for a period of 12 to 36 months. An express warranty can be a good way of reassuring a customer of the product or service, but it is also your written promise to your customers and it must be honoured under the law.

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Statutory (or implied) conditions and warranties are implied by statutes or the common law. Statutory conditions and warranties require you to ensure that every product or service you provide is suitable for the purpose for which it is supplied.

Products must do their job properly, bearing in mind their price and the way they are described. This is a legal obligation which applies whether or not you decide to provide a written warranty or guarantee (voluntary warranty).

For example, a refrigerator is an expensive item. It is not unreasonable to expect it to last longer than 18 months before it's ready for the scrap heap. Even if the written warranty on the refrigerator has expired, a customer may still have a valid complaint under the law, if it had a structural fault eg. defective insulation, not apparent at the time of purchase, which became obvious after only 18 months.

On the other hand, a customer returning a well-read paperback book, two years after purchase, on a complaint about a loosening of the book binding could not reasonably expect to be covered by any statutory warranty.

Your customers should be able to rely on advice from your sales staff. In fact, your ability to provide sound product advice can have a large influence on a customer's impression of your business and the amount of repeat business.

Again, if your business is known for its reliability, it can give you the edge over your competitors.

Case study - you can't guarantee good customers

A customer approached a carpet dyeing business to dye her old, somewhat stained cream-coloured carpet a light blue colour. She was advised by the proprietors, verbally and in writing, that this colour would not cover the stains sufficiently and that only a dark colour would achieve the desired results.

Despite this advice, the customer insisted that the carpet be dyed light blue. As predicted, this did not achieve the desired result.

The customer complained to the Office of Fair Trading where she was informed that, although she was not satisfied with the work performed, the proprietor was not legally obliged to re-perform the job at his own expense, because she had been given professional advice which she had chosen to ignore.

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Customers have obligations too. If a customer wants to follow-up a warranty they must make sure that the product is:

• not affected by being used in an abnormal way. Such a use may be noted in the warranty as rendering it void, or it may be a use that you wouldn't reasonably expect the product to perform
• not disposed of, lost or destroyed. In other words, there needs to be proof that the product has failed
• not reduced in value by delay on the customer's part. Customers should bring faults to your attention soon after they occur.

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If you sell or use a third-party product, you can share the liability for any problems that occur with the manufacturer. Most major manufacturers offer product warranties that they are happy to look after and are usually keen to work with re-sellers or users to ensure their products are reliably serviced. It is ultimately your responsibility though to resolve any complaints from customers.

You cannot limit your liability by excluding, modifying or restricting customers' rights under the law. It is an offence to make false or misleading statements about customers' legal rights. If you do you could face prosecution and financial penalties.

In most circumstances, warranties are managed without any difficulty but if you do experience problems sorting out warranties where you feel another party is at fault (eg the manufacturer), then you may be able take action through the Consumer, Trader and Tenancy Tribunal or the Courts. Before you take any action you should read carefully any contracts you have with the other party and identify where you can demonstrate unfairness or breach of contract. Remember as well, your customers won't want to wait while you sort out your problems, so it is usually wise to honour the warranty now and sort out who is to pay later.

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