An Architect s View of Product Warranties. Albuquerque CSI Continuing Education Conference Paul Simonsen, FCSI, NCARB, CCS, CCCA, LEED AP

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1 An Architect s View of Product Warranties Albuquerque CSI Continuing Education Conference Paul Simonsen, FCSI, NCARB, CCS, CCCA, LEED AP

2 Learning Objectives Understand the difference between an Expressed warranty and an Implied warranty; and between a full warranty and a limited warranty. Understand the purpose of extended warranties, including their benefits and shortcomings. Identify the connections and relationships between warranties and protecting the Owner s interests. Analyze project situations that are caused by confusion over warranties. Albuquerque CSI Continuing Education Conference

3 Warranties What is a product warranty going to do for an owner? Are product warranties more than warm fuzzies? Who is really protected by a warranty Is longer better? Albuquerque CSI Continuing Education Conference Warranties - 3

4 Warranties Is the length of a warranty an indicator of the product s quality? What is the difference between an Expressed warranty and an Implied warranty; or between a full warranty and a limited warranty? Albuquerque CSI Continuing Education Conference Warranties - 4

5 Warranties A promise that a proposition of fact is true. A promise that certain facts are truly as they are represented to be and that they will remain so, subject to any specified limitations. In certain circumstances a warranty will be presumed, known as an "implied" warranty. Albuquerque CSI Continuing Education Conference Warranties - 5

6 Express Warranties Express warranties by the seller are created when: An affirmation or promise is made by seller to buyer; A description of goods is made by seller creates express warranty that goods conform to description. A sample or model is made creates express warranty that final products conform to sample or model. Albuquerque CSI Continuing Education Conference Warranties - 6

7 Implied Warranty A promise that something which is sold is merchantable and fit for the purpose for which the seller has reason to know that it is required. Baby food fit for a baby! Roofing is fit to be used for a roof (MAYBE). Albuquerque CSI Continuing Education Conference Warranties 7

8 Full Warranties A warranty for full performance covering generally both labor and materials. Albuquerque CSI Continuing Education Conference Warranties - 8

9 Limited Warranties Fails to meet minimum standards for "full" warranty. Warranty limited to labor or to materials for a specified time. Albuquerque CSI Continuing Education Conference Warranties - 9

10 Guaranty vs. Warranty Guaranty/Warranty - not interchangeable. Guaranty: Separate contract by third party (i.e. surety bond) assume responsibility in case principal fails to perform. Warranty is assurance by principal that it will assume stipulated responsibilities for completed portions of the project. Manufacturer warrants its material. Contractor provides third-party guaranty for those same materials and warranty for its own workmanship in installing them. Albuquerque CSI Continuing Education Conference Warranties - 10

11 Special Warranties What is a warranty going to do? Construction warranties are usually extended warranties specified in various specification sections. Albuquerque CSI Continuing Education Conference Warranties - 11

12 Construction Warranties Protects owner against faults, defects, or failures. Provides remedy to owner for nonconformance after completion and acceptance of construction. Gives owner recourse against parties not in direct contractual relationship. Extends manufacturer's responsibility beyond end of correction period. Albuquerque CSI Continuing Education Conference Warranties - 12

13 Warranties: Benefits Qualification of installer by manufacturer. Manufacturer's involvement in construction process. Insurance against failure??? Limited warranties seek to avoid litigation by establishing in advance the terms and remedies available under the warranty. Albuquerque CSI Continuing Education Conference Warranties - 13

14 Warranties Common Misconceptions Contractor's responsibility for defective work lasts only until end of one-year guaranty period - NOT!! Warranties are protection for the owner - NOT necessarily true!! Many documents claiming to be warranties are little more than disclaimers of responsibility. Albuquerque CSI Continuing Education Conference Warranties - 14

15 Warranties It is virtually impossible to obtain manufacturer's warranty that is as broad as responsibilities that a construction contractor assumes during correction period. Albuquerque CSI Continuing Education Conference Warranties - 15

16 Warranties: Limitations Most warranties usually limit the scope of their coverage. Warranties usually exclude consequential damages. In many cases, coverage is prorated; for each year of service product or system has already provided, smaller percentage of repair or replacement costs are available. Albuquerque CSI Continuing Education Conference Warranties - 16

17 Warranties: Limitations Warranty may restrict repairs of failures only up to the cost of the original installation, not replacement costs. Some warranties may cover replacing the initially installed product but not cover the replacement product itself. Albuquerque CSI Continuing Education Conference Warranties - 17

18 Warranties: Limitations Though full warranty (materials and labor) is specified, there may be limitations that affect warranty. For waterproofing, the cost of removal and replacement of other materials over waterproofing is generally not included in manufacturer's warranty. Sealant manufacturer may offer a 20-year warranty that is valid only if the sales receipt and original container are returned. Albuquerque CSI Continuing Education Conference Warranties - 18

19 Warranties: Essential Parts Warranty is like money in a box! Amount Door size - access (terms and conditions) Time Albuquerque CSI Continuing Education Conference Warranties - 19

20 Warranties: Essential Parts For anyone to benefit from extended warranties, manufacturer must be financially secure to cover its liabilities. Exclusions limit the applicability of a warranty; a condition must be satisfied in order to make warranty effective. Requirements that apply to maintaining valid warranties are known as "Terms and Conditions." Albuquerque CSI Continuing Education Conference Warranties - 20

21 Warranties: Common Limitations Determine company history and long-term experience with their products. 20-year warranty issued by company that has been in business for 5 years is questionable. 20-year warranty on new product is also questionable. Roofing warranty with limits above certain wind speed, but lower than code requirements (85 mph basic wind speed). Verify that warranty provisions comply with code requirements. Albuquerque CSI Continuing Education Conference Warranties - 21

22 Warranties: Common Limitations Exclude labor and consequential and incidental damages. Some roofing warranties exclude damage caused by ponded water and "gale winds." Beaufort Wind Force Scale Albuquerque CSI Continuing Education Conference Warranties - 22

23 Warranties: Common Limitations Commonly specified factor & most common basis for comparison is duration. However, duration actually may be one of least important terms of warranty - failure to address other terms may leave owner without protection. Time limits often bear no direct correlation with expected service life of product. Albuquerque CSI Continuing Education Conference Warranties - 23

24 Warranties: Realistic Writing Most A/Es avoid specifying insurance requirements - it is common practice for A/Es to specify warranties. Need to know as much about warranties as about physical properties of specified products. Albuquerque CSI Continuing Education Conference Warranties - 24

25 Warranties: Realistic Writing Warranties are only as good as the manufacturer's reputation and become useless if the manufacturer goes out of business. What do you really want? How long? How much? What is acceptable? Is it available? Albuquerque CSI Continuing Education Conference Warranties - 25

26 Warranties: Realistic Writing Address unwanted exclusions by listing acceptable exclusions in specifications Require approval of additional exclusions as condition of product acceptance. Specifications that require contractor to "install in accordance with manufacturer's instructions" will help to preserve owner's rights under warranty, but only if contractor complies. Albuquerque CSI Continuing Education Conference Warranties - 26

27 Warranties: Realistic Writing Despite limitations, warranties instill buyer confidence in product. Compare key clauses and conditions of several warranties and identify those that could cause problems. Clauses stating that terms of warranty are owner's sole remedy nullify protection owner has through implied warranties. Product performance history is more important than warranty. Albuquerque CSI Continuing Education Conference Warranties - 27

28 Warranties: Research Carefully read warranties and determine what is covered and what is excluded. Exclusions are very important. Be cautious of unusual limitations and exclusions. Will roofing warranty be voided if there is indication that animals have been on a roof? - Bird droppings? Albuquerque CSI Continuing Education Conference Warranties - 28

29 Warranties: Research Check references on warranted systems from manufacturer to determine product history. Reports of continual repairs and slow or negative responses to warranty calls may indicate problems with product or company. Is warranty by broker or manufacturer? Is warranty financially backed by product manufacturer? Albuquerque CSI Continuing Education Conference Warranties - 29

30 Warranties: Research Review exclusions and limitations. Concerns include: Warranty exclusive remedy Clauses limiting scope of coverage Clauses limiting assignability of warranty Requirement for owner to sign warranty Warranties containing deductible Clauses limiting time that owner has to take legal action for breach of warranty. Clauses that exclude installation of replacement product. Albuquerque CSI Continuing Education Conference Warranties - 30

31 Warranties: Conclusion When specifying warranties, avoid: Relying on warranty as substitute for thorough investigation of product and manufacturer. Requiring warranty coverage that is not available for a particular product Requiring or permitting warranty that weakens, rather than strengthens, owner's rights. Best assurance of long-term product performance is combination of good materials, appropriate design, and skillful workmanship. No warranty can compensate for lack of these key elements. Albuquerque CSI Continuing Education Conference Warranties - 31

32 End of Session That s All Folks! For additional information, contact: Paul Simonsen, paulsimonsen@msn.com Albuquerque CSI Continuing Education Conference 5A Warranties - 32

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