GUARANTEE

&
WARRANTY
 Project by CLC Project Team 1
Comprising of………….

 A.M.Ashfaq Zaki
 Parvathy Viswanathan
 Ragini
 Thomas Edison
 Vatchala Devi
 Vishnu Thilagam A.S.

Under inspiration and guidance from

Mr. Akbar Ansari,
Faculty for Strategic Management
MEASI INSTITUTE OF MANAGEMENT

11/14/09 guarantee and warranty 2

 Topics and presenter

• Basic Definitions-Thomas Edison

• Distinction between the terms- Ragini
• Uses of the terms- Vishnu
• Legal obligations -Parvathy
• Types of guarantees and warranty-
Vatchala
• Warranty policy and summary - Zaki

11/14/09 guarantee and warranty 3

Basic Definitions
of
guarantee
and
warranty
No. of Persons in Guarantee
Warranty Division
 tia
en
s s of
E ls n t
ra
ar
W y
 Distinction
between
Guarantee and Warranty
 DISTINCTIONS
 GUARANTEE  WARRANTY
 Contract to perform the  State of the subject of
promise or discharge the contract
liability
 Tripartite  Bilateral
 Curing of defects or  Claim for damages
replacement
 Express or implied  Express & written
unless implied under
sale of goods act
 Uses of the terms
Guarantee & Warranty
 Guarantee

Use/ purpose
Types of guarantee

To obtain Loan

Credit purchase/sales

For good conduct Or

Honesty of person
Uses of the term guarantee
1.By the country/states:
 Constitutional guarantee for
civil liberties (Freedom of
speech,expression…..)

2.By business
 Performance guarantee
Drawing lessons from their
western counterparts, domestic banks
have now begun insisting on
equipment supplier performance
guarantees for infrastructure
projects( The Hindu, Bangalore,
May 27,2008)
Guarantee offered by a gym

Satisfaction guarantee
 Points to note
– 100% refund of money if
not satisfied with
performance.
 Guarantee signifies
assurance.
 Guarantee signifies
satisfaction
 Used as marketing tool
Guarantee by banks/fin institutions
3. By banks and financial institutions:
 Credit guarantee( Export credit guarantee
corporation - ECGC)
 Established in 1957 by Govt of India
 Apart from other work they offer, guarantees
to banks and financial institutions which
makes it easy to obtain export finance.
 Bank Guarantee
 Performance Guarantee: Drawing lessons
from their western counterparts, domestic
banks have now begun insisting on
equipment supplier performance guarantees
for infrastructure projects( The Hindu,
Bangalore, May 27 ).
Guranteed benefits by insurance firms

 Life Insurance Corporation of India is planning to

garner Rs 25,000 crore through its new ‘single
premium’ endowment product offering ‘Jeevan
Aastha’.
 The plan would offer guaranteed benefits on
maturity and death.
 The plan offers a guaranteed return of 10 per cent
of the maturity sum assured for a 10-year term
(Hindu, Dec. 8,2009)
Guarantee by placement firms

4. By Training Institutions
 Placement guarantee
 Check difference between assistance and
assurance.
 Most Business schools use the sentence “100% placement
ASSISTANCE”. Observe carefully the tricky word in that
sentence, i.e. ASSISTANCE. No single B school will use words
like ASSURANCE or GAURANTEE. Because, the word
ASSISTANCE has no legal binding but Guarantee has legal
binging. In other words, they are not confident in getting you a
job and you just can’t do anything if they fail to get you the
placement. BITM issues Placement Guarantee Card duly
signed by the Director himself on the first day of admission to
all its students.
Given below is the Placement Guarantee Card. It is
absolutely a straight offer as we are 100% confident on our
teaching methodology.

 Courtesy: www.bitmcollege.com/placement.htm
Data security guarantee

5. E business firms
– Data security
guaranteeAmidst all the talk of the
transformative powers of Web 2.0 and
Government 2.0, ensuring data privacy and
security remains a major challenge for private and
public sector actors. Case in point: the UK
Government announced earlier today that it lost
track of two disks holding over personal data on
over 25million UK citizens. The lost data includes
names, addresses, dates of birth, National
Insurance numbers, and in some cases, bank
details.
– Now, unlike the opposition figures quotes in the
aforementioned BBC piece, I’m no fear monger but
cases such as the question “is our information
ever secure?” I for one believe the answer is no.
No one, in either the private or public sector, can
guarantee 100% data security. We recently
interviewed UK CIO John Suffolk and he echoed
this view, noting that in a loosely federated world,
providing a guarantee of end-to-end security is the
ultimate challenge.
SOFTWARE-WARRANTY CLAUSE!

 This software "Extra Boy Pro" is provided "as is" without warranty of any
kind.
 The author makes no guarantee of correctness, accuracy, reliability, safety
or performance. You alone are responsible for determining if this software is
safe for use in your environment.
 Neither the author, Elevayta, nor anyone else who has been involved in the
creation or delivery of this product shall be liable for any direct, indirect,
consequential, or incidental damages arising from the use or inability to use
such product even if the author has been advised of the possibility of such
damages.
( software to isolate vocals from songs)
www.freemusicsoftware.net
PRODUCT WARRANTY

WARRANTY CLAUSE
METROSONICS warrants each new cl-304manufactured and sold to
be free from defects in material,workmanship and construction,
except for batteries whichmay be contained therein, and that
when used inaccordance with this owner's manual will perform
toapplicable specifications for a period of one year
aftershipment.
If examination by METROSONICS discloses that the product has
been defective, then our obligation is limited to repair or
replacement, at our option, of the defective unit or its
components.
METROSONICS is not responsible for products which have been
subject to misuse, alteration, accident or for repairs not
performed by METROSONICS.
Source: metrosonics acoustic calibrator- Users manual
AUTOMOBILE WARRANTY -Maruti

1. Warranty
 Every Maruti Suzuki Certified used car is refurbished with
Maruti Genuine parts at the state of the art Maruti workshops.
 We are 100% confident that the car you buy meets strict Maruti
Suzuki quality standards. However, should you face any
problem, our comprehensive warranty up to 1 year & 3 free
services ensures that the problem is taken care of and assures
you “complete peace of mind”.
AUTOMOBILE WARRANTY- Maruti

2. Warranty Coverage:

The warranty covers all mechanical and electrical parts

except the following:

All wear and tear parts, parts worn due to aging,

consumables like oil, filters, spark plugs, C.B. points, fuses,
bulbs, paint problems, A/C gas leak, battery, tyres, rubber
and plastic items.
AUTOMOBILE WARRANTY- Maruti

The warranty covers all

mechanical and electrical parts
except the following:

All wear and tear parts, parts

worn due to aging, consumables
like oil, filters, spark plugs, C.B.
points, fuses, bulbs, paint
problems, A/C gas leak, battery,
tyres, rubber and plastic items.
AUTOMOBILE WARRANTY- Maruti

•The warranty varies with age & mileage of the car which is as
shown below:
Age Mileage Warranty Coverage

Up to 5 Years Less than 100,000 comprehensive.

kms One year or 15000 kms

More than 5 yrs & Up to ess than 100,000 Comprehensive.

7 yrs kms Six months or 7500 kms

More than 7 years & up Less than 100,000 No warranty

to 10 yrs kms
Uses of warranty

• By business firms
To enhance their value
Show of quality
Assurance of product performance
Legal obligations
LEGAL OBLIGATIONS-
GUARANTEE
1. Concurrance
2. Primary liability in some person
3. Essentials of a valid contract
4. Writing not necessary
5. Contract of uberrimae fidel
6. Nature of surety’s liability – it is
coextensive
7. Limitation of surety’s liability-Limited
 LEGAL OBLIGATIONS
• -WARRANTY
A warrantor shall fulfil the following
obligations:
• Full and conspicuous disclosure of
terms and conditions; additional
requirements for contents such as:
(1) The clear identification of the names
and addresses of the warrantors.
(2) The identity of the party or parties
to whom the warranty is extended.
(3) The products or parts covered.
 LEGAL OBLIGATIONS
WARRANTY
– A statement of what the warrantor will do in the event of a defect, malfunction, or failure to
conform with such written warranty--at whose expense--and for what period of time.
– (5) A statement of what the consumer must do and expenses he must bear.
– (6) Exceptions and exclusions from the terms of the warranty.
– (7) The step-by-step procedure which the consumer should take in order to obtain performance of
any obligation under the warranty, including the identification of any person or class of persons
authorized to perform the obligations set forth in the warranty.
– (8) Information respecting the availability of any informal dispute settlement procedure offered by
the warrantor and a recital, where the warranty so provides, that the purchaser may be required to
resort to such procedure before pursuing any legal remedies in the courts.
– (9) A brief, general description of the legal remedies available to the consumer.
– (10) The time at which the warrantor will perform any obligations under the warranty.
– (11) The period of time within which, after notice of a defect, malfunction, or failure to conform with
the warranty, the warrantor will perform any obligations under the warranty.
– (12) The characteristics or properties of the products, or parts thereof, that are not covered by the
warranty.
– (13) The elements of the warranty in words or phrases which would not mislead a reasonable,
average consumer as to the nature or scope of the warranty.
– (b) Availability of terms to consumer; manner and form for presentation and display of information;
duration; extension of period for written warranty or service contract
– SOURCE:Magnuson Moss Warranty Act FROM INTERNET
 Types
of
guarantees and warranties
 Types of guarantee

Based on
time

Retrospective Prospective
 Types of guarantee

Based on continuity

Specific Continuous
 Types of Bank Guarantee
 Guarantee in regards to goods
 Guarantee on a person
• Tender guarantee/bid bond (EMD)
• Performance Contract Guarantee(PBG)
• Credit guarantee/Supply guarantee
• Custom bond
• Guarantee for exemption of customs duties
• Advance Payment guarantee
• Guarantee for honoring cheque
source: http://quanterion.com
 Warranty types

Based on time

Limited period Extended Life time

warranty warranty warranty
 Warrranty types…
Based on
Formality

Expressed Implied
 Warranty types

For Consumer
Goods

Ordinary free Unlimited free

Prorata
Replacement Replacement
type
type type
 Warranty types

Manufacturer Seller

Replacement Repair Replacement Repair

Warranty Warranty Warranty warranty
Guarantee-general requirement

 Maintain business ethics

 Maintain good conduct
 Maintain good relations with banks and other
stake holders.
Warranty
Policy
Warranty Policy

Selection of type of warranty

 free replacement-advantage buyer
 pro-rata-advantage seller
 mixed policy is a compromise.
Warranty Planning inputs

 whether the product is repairable or non-

repairable
 repair cost
 warranties offered by competitors
 Average break down probability
Warranty Policy

 Should be consistent with the product type,

design, type of use, nature of use
 Should be explicit and necessarily in writing
 Paperless administration preferable
 Good administering mechanism
Summary
Summary
 Guarantee implies promise, pledge,
agreement, security, surety
 Warranty is undertaking, certification and in
general terms a contract.
 While guarantee is towards intended
performance, warranty is extension of
contract/service
 Guarantee is used by many institutions while
warranty is mainly used in business
products.
Summary
 Organizations offer warranty to express
their
 Products superior quality
 Support after sales
 Maintain customer value
 Warranty shall be in clear terms unless
is implied.
Summary
 Individuals and organizations shall
adopt good conduct and ethics to
obtain guarantee value
 Organizations shall have clear cut
warranty policy and efficient warranty
administration.
References
 Elements of merchantile law by
N.D.Kapoor
 The Commercial Loan Guaranty –
Types & Techniques Rick L. Knuth
 http://www.aqualung.com
 Microsoft Students encarta
encyclopedia
 www.Wikipedia.com
PRACTICE AND DISCIPLINE
GURANTEES SUCCESS
-DHRONACHARYA

THANK YOU