Special Warranties

Specification & Product Discussions Construction Contract Administration Discussions
1

I thought we would have a nice spot to talk about construction contract administration issues, but we got sidetracked discussing the title. Now we are ready to go, but the thread is identified as “Three Cheers for Colin!” - hardly a sign that people are talking about construction contract administration issues in this thread.
Shall we continue, or would it be better to have a more descriptively titled thread?

Here, or under another thread,I have an issue I would like to bring up. I hope it does not go unnoticed amid all the cheers:

When the time comes to collect Special Warranty statements near the end of the work, I am frequently given what amounts to a set of conditions for the sale of goods. These contain the producer’s typical waiver of expressed or implied warranty as to the goods’ merchantability or fitness for purpose.

Of course such a submittal, which has accompanied the purchase and shipping of the goods, expressly excludes installation. This is typical for sale of goods under the Uniform Commercial Code.

Most contractors tell me they do not understand what I’m complaining about when I reject the paper. “A warranty is a warranty”, they say one way or another.

“And it’s the only warranty they sent us”, the argument often continues.

Many Special Warranty requirements of the specifications (often labeled WARRANTY in spite of the fact that warranty is already covered under AIA A201 3.5) are so scantily written that the CC administrator has little ground to argue from. This can invite a situation in which conditions for the sale of goods end up being substituted for a SPECIAL WARRANTY (the latter being referred to in A201 12.2.2 and 4.2.9)

It goes without saying that the owner is expecting that defective goods AS WELL AS their defective installation -

  1. will be corrected for 1 year, and
  2. that the provisions of the Special Warranty will be enforced, and
  3. that the warranty of the entire Work will continue for the duration of actions permitted under the state’s statute of limitations or repose.

The owner cares nothing about how the subcontractor or installer bought his materials months back.

2

See the thread “Warranties and Correction Periods” under the Specifications heading, from January 2005, for related issues.

3

At the recent CSI Academy in San Francisco, a plaintiff attorney named Gerald Katz prepared a very thorough training topic on Warranties, and went into detail about the implied warranty of merchantability which sounds like the topic you are describing.

I will find out the copyright info on this, because they provided a CD-ROM of all this excellent material…

4

Let’s face it. Warranties are a joke. They are just marketing gimmicks. I don’t really put much empahsis on them in my specifications.

Warranties have so many exclusions that they are practically useless. When was the last time that you heard of anybody collection on a building material warranty anyway?

5

Handouts from the academies are for sale in the CSI Bookstore.

6

Some projects I specified earlier this year resulted in letters from sureties stating that they would not provide bonds on projects in which extended warranties for roofing and waterproofing were specified.

The warranty requirements were somewhat typical as far as duration (15 years for roofing, 5 years for waterproofing). Each of the three letters I received stated that any warranties extending the contractor’s committment beyond 1-year were considered excessive.

Thinking that the sureties misunderstood my requirements, I spoke with each of them briefly, but to no avail.

Since that time, I have received no other such correspondence. Was this flurry of letters the result of misguided advice received in a seminar or a published article? Or is it the start of a new trend? Has anyone else had a similar experience?

7

David, I have not seen anything of that nature. In Southern California, the typical roof warrenties requested by my clients (mostly developers) are 10 year NDL’s, and I’ve had no issues getting them…yet?

8

Wyatts experience with contractor and contractor surety objections to his special warranty writing is unusual in only one respect: He received objections rather than simply being ignored.

I administered special warranties on roofing for a firm that cared deeply about roofing performance in the 1980s. They were not written to go beyond the customary warranting by reputable roofing producers. Instead they struck an average of the good producer warranties that were then published in Sweets and producer binders. By specifying the average provisions of these warranties, the firm could then specify 3 or more quality roofing lines in the bidding. The specs of this firm that I worked for only required that the special warranty for roofing, as stated in the Contract Documents, be signed and submitted at closeout.

The response was zilch. None of the project manuals special warranty forms (which had signature lines) were ever submitted at closeout.

There was no time in the rush of completing jobs to play holdback and acceptance games. With few exceptions, we moved on by accepting stock producer warranties that fell short of what had been written (but which frequently contained qualities better than the average that had been published in our specs special warranty article). All this was acceptable to our prime client for whom this architectural firm was continuing to turn out building after building - in a time of boom.

My point is this. A true special warranty is written by the specifier to extend the owners protection beyond the 1-year Correction of Work period. (That is why MasterSpec offers no special warranties of less than 2 years.) Other than that, a speciifer-drafted special warranty should stick close to common good industry practice.

Construction Specification Writing (Rosen / Regener) has the best description of a special warranty following the AIA concept. AIA and CSW would do well to use one term in addition to Warranty (the entire work, A201 3.5) and special warranty: the third type might be called a producer warranty written by a producer and used intact..

A producer-written warranty submitted in place of special warranty text is sometimes acceptable if it effectively matches the special warranty provisions that are specified. Until Wyatt posted his experience of having objections from sureties, I had never heard of fairly-written special warranties being condemned. I do not think this happens often.

I think the incidents he relates can be countered by refusing to accept substitution of a producers warranty for the published special warranty requirements.

After all, an average practicespecial warranty still protects the producer and installer more than it does the owner. By stating that the special warranty is a limited warranty, and by listing fair exclusions, it is still more beneficial to the producer than having his own limited warranty turned down.

If producers would learn that a 2-year special warranty (producer variety) is the minimum acceptable to an architect and owner, and if they do not exclude every condition that might arise, they would stand a better chance of being accepted, and would be better off in getting some sort of limited warranty protection.

9

I’ve had experience similar to Mr. Wyatt’s with surety objections to warranty provisions. It may be a regional trend (Ohio) but they do seem to be thoroughly reviewing every project.

The objections seem to be focused on long-term installer and joint installer/manufacturer warranties; manufacturer-only warranties are not a problem. We have addressed this by limiting surety obligations to 2 years even when the installer is providing a warranty for a longer period. This seems to satisfy their concerns.

We have also started specifying that sample warranty forms be submitted for review at the same time as product data and shop drawings. That way there’s opportunity to review them and correct potential problems prior to the closeout crunch.