WARRANTIES, LIABILITIES, PATENTS, BIDS, AND INSURANCE

Warranties
• A warranty is a written statement that promises the good condition of a product
and states that the maker is responsible for repairing or replacing the product
usually for certain period after its purchase.
• Usually, a written guarantee of the integrity of a product and of the maker’s
responsibility for the repair or replacement of defective parts.

TWO TYPES OF WARRANTIES

1. Implied Warranty - An implied warranty is a presumed assurance in product

sales. The assurance is treated as a warranty whether the product seller has given
assurances of the same either in writing or even orally. Under implied warranty
there are several other warranty types including the following:
a. Warranty of Merchantability
b. Warranty of Fitness For A Particular Purpose
c. Warranty of Title
d. Warranty Of Habitability

2. Extended Warranty - Also called service agreement, an extended warranty is

usually offered to customers on top of the standard warranty that is issued on new
products. It is also known as “Vehicle Service Contract”. It can be offered by a
retailer, manufacturer, or warranty administrator.
• This type of warranty is prolonged in nature and is a bit more costly.

WARRANTY PERIOD
• A warranty period is the period that warrant free repair and adjustment services in
case of a malfunction occurred under normal use that has followed instruction
manuals. The period varies according to manufacturers, retailers, and products.
GUARANTEE
• A guarantee is a formal promise or assurance (typically in writing) that certain
conditions will be fulfilled, especially that a product will be repaired or replaced if
not of a specified quality and durability.

DIFFERENCE BETWEEN WARRANTY AND GUARANTEE

• A guarantee is a promise that something is of good quality and will perform the
way it is intended to. A warranty is an assurance issued to the consumer, which is
attached to a product.

NOTES:
• Many products, such as electrical goods, are offered with a manufacturer's
guarantee or sold with a manufacturer's warranty that often lasts for one year.
Guarantees and warranties are a contract between you and the manufacturer, and
the manufacturer must do whatever it says it will do in them.

• If you can't find the guarantee or warranty, contact the seller or trader, and ask if
they have a copy or the manufacturer's contact details. When you make a claim,
you'll usually need: proof of purchase - usually a receipt showing where and when
you bought the goods, details of what the problem is.

LIABILITIES
• Liabilities are defined as a company's legal financial debts or obligations that arise
during business operations. Liabilities are settled over time through the transfer of
economic benefits including money, goods, or services.
• It includes:
a) Loan - is money, property or other material goods given to another party in
exchange for future repayment of the loan value amount, along with interest
or other finance charges.
b) Accounts payable - is money owed by a business to its suppliers shown as
a liability on a company’s balance sheet.
c) Mortgages - is a debt instrument, secured by the collateral of specified real
estate property, that the borrower is obliged to pay back with a
predetermined set of payments.
 d) Deferred Revenue - also known as “unearned revenue”, refers to advance
payments a company receives for products or services that are to be
delivered or performed in the future.

CLASSIFICATIONS OF LIABILITIES

1. Current liabilities (short-term liabilities) - are liabilities that are due and payable
within one year.
Examples: Accounts payable, interest payable, income tax payable, bills payable,
bank account overdrafts, accrued expenses, and short-term loans.

2. Non-current liabilities (long-term liabilities) - are liabilities that are due after a
year or more.
Examples: Bonds payable, long-term notes payable, deferred tax liabilities, mortgage
payable, and capital lease.

3. Contingent liabilities - are liabilities that may or may not arise depending on a
certain event.
Examples: Lawsuits and product warranties.

DEBT
• Debt is an amount of money borrowed by one party from another. Debt is used by
many corporations and individuals as a method of making large purchases that
they could not afford under normal circumstances.
• A debt arrangement gives the borrowing party permission to borrow money under
the condition that it is to be paid back later, usually with interest.
 NOTES:
• Debt majorly refers to the money you borrowed, but liabilities are your financial
responsibilities.
• All debts are liabilities, but not all liabilities are debts.

PATENTS
• A patent is the granting of a property right by a sovereign authority to an inventor.
This grant provides the inventor exclusive rights to the patented process, design, or
invention for a designated period in exchange for a comprehensive disclosure of
the invention.
• Government agencies typically handle and approve applications for patents. The
government agency responsible for grant of patent rights in the Philippines is the
Intellectual Property Office of the Philippines (IPO)

THREE TYPES OF PATENTS

1. Utility Patent
• A patent that covers the creation of a new or improved and useful product,
process, or machine.
• Also known as “Patent for Invention”
• Utility patents are granted for 20 years from the date that the patent application
was filed. In addition to the initial patent filing fees, inventors must submit
maintenance fees throughout the life of the patent to keep the patent’s
protection.
• It prevents others from manufacturing, selling, using, or distributing your
invention, and once you’ve been filed for a utility patent, your invention will
have immediate “patent pending” status, which acts as a disclaimer until the
patent has formally issued.

2. Design Patent
• A design patent protects its aesthetic appearance. Design patents can be issued
for the appearance, design, shape, or general ornamentation of an invention. A
design patent is good for 14 years from the date the patent was granted.
 • Unlike utility patents, there are no maintenance fees associated with a design
patent, and the patent is sustained without question once it is issued. A design
patent prevents others from using, selling, or manufacturing the appearance of
your product. Again, the protection is only for its aesthetics and not its
function. A design patent can’t be granted if a similar design exists, and it
doesn’t not have to be an exact copy but must be very similar.

3. Plant Patent
• It is possible to invent or discover a new and distinctive plant, and patent
protection can be sought via a plant patents.
• A new and distinct asexually reproduce plant that is invented or discovered can be
patent protected.
• Plant patents have a duration of 20 years from the effective filing date of the
corresponding patent application.
• The remaining three types of patents are known as Reissue Patents, Defensive
Publications, and Statutory Invention Registrations. These last three patent types
are encountered infrequently and are only appropriate in limited circumstances.

BID
• A bid is an offer made by an investor, trader, or dealer in an effort to buy a security,
commodity, or currency. A bid stipulates the price the potential buyer is willing to pay, as
well as the quantity he or she will purchase, for that proposed price.
• Also refers to the price at which a market maker is willing to buy a security. But unlike retail
buyers, market makers must also display an ask price.

TYPES OF BIDDING
A. Highest Bid
• The bidder who makes the highest bid over the amount due for the tax lien is the
winning bidder. Any amount you pay for the tax lien beyond the amount due is put
into an account that earns interest over time. This excess amount is called the bid
premium.
 B. Buyer’s Bid
• The buyer’s bid is like the highest bid. You will bid a dollar amount for the tax
lien. However, the amount of your bid that is more than the amount due on the tax
lien will not be returned to you if the property owner redeems the tax lien. The
more you pay for the tax lien, the lower your investment yield will be.

C. Interest Rate Bid

• Bidders bid on the minimum interest rate that is acceptable for them to receive.
Bidders do not bid a tax lien amount. The winning bidder will have to pay the
delinquent taxes and penalties in full.
• The interest receive is the bid. A bid cannot be an interest rate that is higher than
what the taxing authority can legally charge the property owner.

D. Property Interest Bid

• Bidders bid for an interest in the property. The bidder who is willing to take the
smallest portion of undivided interest in the property will win the tax lien.
• The idea is to protect the property owner. If the property owner does not redeem
the tax lien, you can foreclose on your interest in the property.

INSURANCE
• Insurance is an agreement in which a person makes regular payments to a
company and the company promises to pay money if the person is injured or dies,
or to pay money equal to the value of something if it is damaged, lost, or stolen.
• Insurance is a means of protection from financial loss.
• An entity which provides insurance is known as an insurer, insurance company, or
insurance carrier.
• A person or entity who buys insurance is known as an insured or policyholder.
 DIFFERENT KINDS OF INSURANCE
A. Life Insurance
• the greatest factor in having a life insurance is for those you leave behind.
• Two basic kinds of life insurance:
a. Traditional Whole Life – is a policy you pay on until you die.
b. Term Life – is a policy for a set amount of time.

B. Health Insurance
• helps pay for some of those unexpected costs, and provides financial protection against
ongoing large medical bills.
• Philippine Health Insurance Corporation (PhilHealth) was created in 1995 to implement
universal health coverage in the Philippines. Its stated goal is to ensure a sustainable
national health insurance program for all.

C. Long-Term Disability Coverage

• an insurance most of us think we will never need, as none of us assumes we will become
disabled. Disability insurance will guarantee that you will have some income when you can’t
work.

IMPORTANCE OF INSURANCE
• Provide safety and security.
• Generates financial resources.
• Life insurance encourages savings.
• Promotes economic growth.
• Medical support.
• Spreading of risk.
• Source of collecting funds.

NOTES:
• The insurance serves indirectly to increase the productivity of the community by
eliminating worry and increasing initiative. The uncertainty is changed into
certainty by insuring property and life because the insurer promises to pay a
definite sum at damage or death.
• Charity is given without consideration, but insurance is not possible without
premium. It provides security and safety to an individual and to the society
although it is a kind of business because in consideration of premium it guarantees
the payment of loss. It is a profession because it provides adequate sources at the
time of disasters only by charging a nominal premium for the service.