Limited warranties vs. implied warranties

The Apple iPad, as with other Apple products, comes with a one year limited warranty. The warranty is considered limited under the Magnuson-Moss Warranty Act because it has a time limitation, and also because it is limited to the original end-user purchaser. This product, as with all goods sold, is covered by the UCC. Under this warranty, Apple is the warrantor, and the consumer in the person of the original end-user purchaser is the warrantee. Close examination of the warranty (which required an actual magnifying glass) makes me think that the warranty is as much or more for the benefit of Apple as for the consumer.

The warranty states that Apple warrants the hardware against defects in materials and workmanship under normal use for one year from the date of retail purchase by the original end-user. If a hardware defect is found and a valid claim is made within the warranty period, Apple can choose to either repair the unit with either new or refurbished parts, or replace the unit with a new or refurbished unit, or refund the purchase price.

Apple has avoided being responsible for any implied warranties by stating in capital letters, “Apple specifically disclaims any and all statutory or implied warranties, including, without limitation, warranties of merchantability and fitness for a particular purpose and warranties against hidden or latent defects.” Presumably by placing this paragraph in all capital letters, Apple meets the requirements under the UCC 2-316 that the disclaimer must be “conspicuous”.

The warranty also has an “exclusions and limitations” section which specifies various items or incidents that would not be covered, such as damage due to an earthquake, and damage caused by repairs done by a non-Apple service provider. The warranty also specifies: “do not open the hardware product. Opening the hardware product may cause damage that is not covered by this warranty. Only Apple or an authorized Apple Service Provider should perform service on this hardware product.”

Marc L. Roark wrote an interesting issue brief for the Duke Law & Technology Review about the use of limitation of warranties to deter consumers from circumventing intellectual property rights. Apple does not want consumers to open their products and make their own updates to the product, whether it is iPhone users wishing to use the phone on a non-contractual carrier or iPod/iPad users who want to add apps that are not supported by Apple. The reason is two-fold: first because Apple makes a profit when consumers use their contractual carrier or their supported apps, and second because Apple does not want hackers or pirates to copy their products.

However, the patent and copyright law first sale doctrine allows consumers to alter a product after they purchase it, so manufacturers are using limitations on the warranty as incentive to consumers to not open the hardware. By voiding the warranty if the consumer opens the unit, uses the unit in an unauthorized manner, or seeks repair from a non-approved vendor, Apple seeks to regain control over the devices it sells. In the behavioral model discussed by Roark in his brief, the results suggested that the threat of having the warranty voided was three times more effective as a deterrent to opening the device than the threat of litigation, mainly because most people did not feel they were very likely to be prosecuted for opening the device, whereas they felt it was more likely the warranty would indeed be voided. However, the study concludes that many consumers do not feel that the loss of Apple’s limited warranty is much of a loss; therefore they believe that having a better warranty would be a better deterrent for unauthorized activities.

With this limited warranty, Apple seems to have created enough loopholes for themselves that it seems as though few consumers would benefit from the warranty; therefore I feel that the warranty is more of a protection to the warrantor than the warrantee in this case.

References

Roark, Marc L.  “Limitations of Sales Warranties as an Alternative to Intellectual Property Rights: an Empirical Analysis of iPhone Warranties’ Deterrent Impact on Consumers.” 2010 Duke L. & Tech. Rev. 018 (2010):  n.pag.  Duke Law & Technical Review.  Web.  16 Mar. 2011.

Liuzzo, Anthony L.  Essentials of Business Law. New York:  McGraw-Hill, 2010.  Print.

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