Owners and developers should be wary of the warranties that manufacturers of materials and equipment usually attach to the materials or equipment they sell, as warranties often strip more benefits than they confer. If you're planning new construction, or a remodel of your existing property, ask these questions about your product warranties:
- What's the warranty period?
Warranty periods can be very misleading. If the warranty claims to be exclusive (and they often do), a warranty that's shorter than the limitations period provided by law actually reduces the time to bring claims for defective products. Also, while many warranties extend past the limitations period (sometimes 20 years or more), the warranty payout actually decreases with each passing year. This means that a warranty claim made in the middle or later years of the warranty period may hold very little value.
- When does the warranty period begin to run?
In some cases, warranty periods will run from the date of manufacture and not from the date of purchase or delivery. So, if a product you buy was in circulation for two years and has a two-year warranty from the date of manufacture, you have no warranty rights. In addition, longer warranties can be shortened by the statute of limitations, as some manufacturers argue that a claim must be brought within the statute of limitations even though the warranty purports to exist for 20 years.
- Are other warranties and claims disclaimed?
Most product warranties state that they are in lieu of any other remedy, including otherwise legally implied warranties. By disclaiming implied warranties, the manufacturer tries to limit your remedy to only the express warranty – with all of its limits. These limits typically exclude liability for incidental, consequential, special or punitive damages. These types of damages are quite broad. For example, consequential damages may include loss of revenue or loss of use resulting from a failed product, or the cost of construction services necessary to fix a defective product. Also, many warranties state that the manufacturer's total liability can't exceed either the purchase price or the product's replacement cost. This means that you get a new product for free, but you have to shoulder the cost of, for example, removing the old windows and installing the new windows. In most cases, the construction cost exceeds the product cost by a fair margin.
- What's the impact of manufacturer's instructions?
Many product warranties include the manufacturer's installation instructions and state that the consumer receives warranty benefits only if these instructions are strictly followed. When a product failure occurs, the manufacturer may send a representative to inspect the site and, if that representative determines that the installation instructions weren't strictly followed, the manufacturer will disavow any warranty obligation. Warranties with such language may be disavowed even if the instruction that wasn't followed had nothing to do with the cause of the product failure.
- Have I tried to negotiate better warranty terms?
Many consumers either don't read the warranty carefully or assume that "it is what it is" and nothing can be done to change it. But this isn't always true. Consumers should compare warranties of competing manufacturers. If one warranty is better than the other, but you prefer the product with the lesser warranty, call the manufacturer and ask if they will meet the terms of their competitor's warranty. If the competitor's warranty is similarly weak, revise the language and ask the manufacturer whether they will sell their product under your alternative language. You never know what you can get until you ask for it.
Commercial consumers often have more leverage because the size of their purchase will tempt the manufacturer to be flexible with their language. Failing to take advantage of this leverage can be a critical mistake.
- Has the manufacturer confirmed the warranty?
To avoid the manufacturer disavowing its warranty, ask whether it will send a representative during construction to confirm that the product is installed in accordance with manufacturer's instructions. Waiting to confirm a warranty until you bring a claim risks the manufacturer disavowing the warranty.
Like many other aspects of construction agreements, careful reading and good negotiation up front will reduce your risk and provide a better result with relatively little effort.