What product warranties should a company provide when selling products into the USA , either directly or through resellers?

The USA market is the most competitive business environment for many products. Often, it’s the little things that give a particular company’s products a competitive advantage with US consumers. One of the potential ways to establish a competitive advantage for a particular product is through offering useful product warranties to US consumers.

In addition to any express warranty or guarantee that may accompany a product, a company may consider representing and warranting that its products will be:

• delivered to the consumer free from any defects in design, material and workmanship;
• merchantable at the time of delivery; and
• fit and safe for sale and for use(s) for which such products are ordinarily intended.

US consumers expect a particular product to meet their functional expectations as well as established US product standards and specifications, whether legislated or derived from industry best practice.

US consumers also expect to receive a refund or credit for all costs incurred by it and directly related to the proper rejection of a defective product.

It is quite common place to find an express warranty for product quality and merchantability that extends for ninety (90) days from the point of purchase of the product. A company that is looking to differentiate itself from its competition may offer an extended warranty, such as a twelve (12) month guarantee or a life time guarantee for its product quality and merchantability.

USA labeling laws are quite rigorous, and penalties for non-compliance are severe. No product should be labeled “Made in U.S.A”, “Made in America ”, or any similar language unless such product and every component and part of such product are 100% made in the USA , as contemplated by applicable laws.

A company’s description of its products will need to be true, accurate and not misleading.

If a company appoints a reseller in the USA to sale the company’s products, the company will likely be required to give the reseller certain warranties, such as:

• products will not infringe (directly or indirectly), misappropriate, or violate any patent, trademark, trade name, service mark, trade secret, mask work, copyright, design, publicity, privacy or any other proprietary right of a third party;
• products are not defamatory or obscene; and
• the company has the right to sell the products, and appoint resellers in relation to selling the products.

A company selling products through a reseller in the USA will likely be asked by the reseller to make certain representations and warranties in relation to complying with US law, including that the company’s products are designed, manufactured, packaged, priced, labeled, tagged, stored, shipped and invoiced in compliance with all applicable federal, state and local laws and regulations, including, but not limited to, the following laws (as amended), and all regulations promulgated thereunder:

• the US Consumer Product Safety Act;
• the regulations of the US Consumer Product Safety Commission;
• the US Fair Labor Standards Act of 1938;
• the US Food, Drug and Cosmetic Act;
• the Clayton Antitrust Act (Section 2);
• the US Fair Packaging and Labeling Act;
• the Federal Hazardous Substance Labeling Act;
• the Department of Transportation, Federal Trade Commission rules and regulations; and
• the Consumer Product Safety Commission rules and regulations.

It is critically important to a company’s long term competitive advantage that its product warranties comply with both US law and US consumer expectations.