Can I claim for an extended vehicle warranty?
Question:
A car dealer purchased a vehicle from a individual, the individual was paid for the vehicle in full. A few days later the dealer picked up that the vehicle missed a service while under the ownership of the seller and now the motor manufacturer has cancelled the warranty. Can the car dealer claim from the seller or return the vehicle to the seller.
Answer:
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
A warranty is a form of corporate guarantee that a manufacturer or similar party makes regarding the condition of its product. It also refers to the terms and situations in which repairs or exchanges will be made in the event the product does not function as originally described or intended.
Warranties usually have exceptions that limit the conditions in which a manufacturer will be obligated to rectify a problem. For example, many warranties for common household items only cover the product for up to 24 months from the date of purchase and usually only if the product in question contains problems resulting from defective parts or general workmanship. (https://en.wikipedia.org/wiki/Extended_warranty, sourced and accessed on 26 September 2021)
In principle, an extended warranty purchased inclusive of the actual asset sold is permitted and hence forms part of the actual purchase and sale agreement and not as an individual separate transaction. Certain individual and extended warranties may be permitted based on the specifics of the underlying terms and conditions of such warranties.
We refer to your specific query in reference.
You state that you purchased a vehicle and the extended warranty was cancelled by the manufacturer since the seller missed a service.
According to Shariah, the purchaser has an inherent and definitive right to annul and terminate the purchase and sale agreement with the purchaser in the event of a defective asset of sale/commodity. This is termed as Khiyar al-Aib or Khiyar al-Wasf. The extended warranty purchased inclusive of the asset/vehicle is considered to be a feature of the purchased asset.
In the enquired scenario, if you purchased the vehicle with the extended warranty and the said warranty was cancelled due to a missed service as stated above in your query, then you are entitled to a full refund and the subsequent cancellation and termination of the original purchase and sale agreement. Alternatively, the seller and purchaser may reach a mutual settlement regarding the issue. Moreover if the extended warranty was purchased individually and separately from the vehicle, then the seller could seek a refund from the seller only based on the underlying fundamentals of the extended warranty policy terms and conditions. We do understand that certain extended warranties may be permitted individually due to the specific nature of such a policy and the Shar’ee concept of Ijarah Mushtarakah and Takhalli (Fathul Qadeer, Pg. 188, Vol.7. Muheeth al-Burhani, Pg.297, Vol.11)).
You may contact us directly to review such extended warranty policies for a detailed shariah analysis.
We advise the parties to seek a shariah compliant alternative resolution process such as shariah compliant mediation and arbitration through competent Mufti’s and Ulema.
and Allah Ta'ala Knows Best
(Mufti) Ismail Desai
Chairman of Shariah Board and Fatwa Committee
Darul Iftaa, Durban, South Africa
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