File this one under “does your warranty really say what you think it says?” It is common for manufacturers to promise they will repair or replace defective products (or components) for a certain period following purchase or delivery. Those promises often take the form of: “Manufacturer warrants its product will be free of defects in material or workmanship for a period of five years following the date of purchase. In the event Manufacturer is notified of such a defect within the applicable time period, Manufacturer will repair or replace the product.”
This kind of language has some important implications beyond the obvious. The Uniform Commercial Code typically provides a four-year statute of limitations for breach of warranty actions. That limitations period, however, is extended “where a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance[.]”
Many courts would look at warranty language like that set out above and conclude the manufacturer made a warranty that explicitly extends to future performance of the goods, such that the extended statute of limitations applies. We can dispute whether those courts are correct to do so, but the fact remains that they do.
In a recent case, the South Carolina District Court examined a well-drafted repair/replacement warranty, and reached the correct result on the limitations question. I present it to you here so you can see how your language matches up. Here’s the relevant language:
If [Manufacturer] is given notice of a defect in materials or workmanship occurring within ten (10) years from the date of sale by [Manufacturer] or its authorized dealer, [Manufacturer] shall, at its sole option: 1) repair or replace the defective part(s) or product(s) (with cost of labor included only within two years of the date of sale by [Manufacturer] or its authorized dealer) or 2) refund the original purchase price.
The plaintiff argued this warranty triggered the lengthened limitations period. The Court saw through that argument, noting that the warranty said nothing about the future performance of the goods, but rather it spoke to what the manufacturer would do in the event it received notice of certain defects that manifested within ten years of purchase.
A lot of courts wouldn’t reach that conclusion. For example, in one line of cases I find particularly baffling, some Missouri courts hold that “a warranty that a product is free from defect in quality or workmanship . . . is a warranty for future performance of the product.” That analysis, of course, reads the word “explicitly” entirely out of the UCC limitations provision.
But I think the manufacturer in the South Carolina case did itself a favor, even if its language perhaps would not have sufficed in Missouri. The key is the clarity with which it linked its temporal language to its duty to repair or replace (that is, to its exclusive remedy) rather than to when the defect occurred. Go back to the sample language in the first paragraph of this post and see how it looks, if you squint at it hard enough, like a promise the goods will perform to a certain standard in the future. The manufacturer here avoided that problem.
Many manufacturers (or their attorneys) adopt a loose approach to the distinctions between warranties and remedies limitations, existence of defects and manifestation of those defects. That sort of loose approach can lead to trouble. The manufacturer here did a good job, and you should check to see if your terms do the same.