What you need to know about contracts and warranties

Signing a contract

Just as you would negotiate the financing of a car, almost everything in a lease is also negotiable including:

  • Asking price
  • Residual value
  • Excess mileage charges
  • Purchase option price

A written contract is a legally binding agreement signed by the buyer and seller. It spells out the obligations each party has to the other. This can be a formal and official-looking document, or it can be a handwritten on a sheet of paper.

Once all parties have signed the contract, it generally cannot be changed or broken unless both parties agree. That said, it is very important that you are sure the product or service you are signing the contract for, meets your needs. Before you sign, make sure you have read the contract fully and understand every word and clause contained in the contract. If there is anything you do not understand, ask questions or seek a lawyer's advice.

Regardless of what a contract is for, always follow these rules:

  • Get a copy of the contract.
  • Only deal with reputable individuals or companies. If you have any doubts, do not sign.
  • Find out if there is a cancellation policy and what it is.
  • If the product or service comes with a warranty, make sure the contract states this and clearly states the terms and conditions. A verbal warranty means very little.
  • Ensure all promises made by the seller are included in the contract, including the conditions of sale. These should include:
    • price, type and model number of every item
    • quality and condition of materials
    • service obligations
    • time of delivery or completion, if applicable
  • Make sure all goods, services or obligations you do not want, are crossed off from all copies of the contract and initialed by all parties. Or, even better, rewrite the contract.
  • All blank spaces must be filled in.
  • Be prepared to live up to all provisions in the contract, regardless of what the salesperson says.
  • Never let anybody pressure you into signing anything. Take your time.