Warranties

[robert_w_johnson]

The reason for the term “Limited Warranty” is because of the UCC - the seller is stuck with required warranties under the UCC unless the seller issues a “Limited Warranty” that disclaims the UCC warranties that the buyer accepts - that’s why you see the "Limited Warranties on the packaging or included with the instructions - you accept the package and you have accepted the Limited Warranty. The UCC also allows the “Limited Warranty” to include limitations and exclusions which allows the manufacturer to protect itself more than the buyer per the above discussion.

It is amazing to me that all of the above discussion on warranties is limited to manufacturers and subcontractors. Anybody remember that the Owner has a contract with the Contractor that usually includes a warranty. With AIA documents that is an unlimited warranty with a one-year correction period. Why is an extended warranty (or extended correction period) on particular work results with the Contractor not in the discussion? You can also require a warranty to be signed by the Contractor, installer, and manufacturer to try to ensure that someone will be there to respond. If you do it with just the Contractor, it is now his business on how he passes the liability on down to the installer and manufacturer.

[jim_sliff]

Wording of warranties is tricky, and unfortunately most are copy-and-paste documents with bits and pieces “borrowed” from competitors’ documents, often by somebody in marketing with no legal oversight; I’ve seen entire warranties created by simply performing a “find and replace” in Word to change the manufacturer’s name.

Smaller companies usually have owner involvement, and he may include completely unenforceable wording (without realizing it) simply because he wants a particular requirement included.

But even the “big guys” can produce warranties that don’t undergo legal review (until there’s legal action).

Almost all include things like:

“…(manufacturer will, it its option, repair or replace (unit, gadget, material) determined to have failed due to defects in manufacturing or raw materials, subject to other terms of this warranty and/or required by applicable law(s)…”

Now add (if it’s a part, gadget, piece of machinery) “…FOB (somewhere in the world).”

or - "in sufficient quantity to repair failed (whatever the covered item is).

In the first example you have to ship the thing…whether a bolt or a 2-ton air compressor…to the manufacturer. Often nothing is stated about how you get a new or repaired widget back.

In the second, good material will be supplied to replace material in the spot that failed - even though ALL the product is defective.

The “curb warranty” at its worst.

The determination of what is “defective”, as defined in the warranty, is almost always required to be made by the manufacturer (The fox guarding the henhouse). A determination of “defective product” by a third party isn’t applicable - if the manufacturer says the product is OK, it is ok.

Then there’s the issue Bob raises regarding the parties involved. In my experience written warranties are requested (as required in the Specs or as a sales tool) by the subcontractor, but parties named are the manufacturer and owner. The warranty creates a new contract between owner and product manufacturer - the contractor is out of the loop if there’s a problem and the sub is involved only if the warranty covers BOTH material and labor.

Even then, there are two types of “material and labor” warranties:

1. Warranties that cover defects in material AND installation problems, and
2. Warranties that cover only material defects, but include replacement labor.

There’s a huge difference and it’s a card-trick game played every day. If possible the sub will submit a “replacement labor only” sample warranty no matter what’s required and only submit a “real” labor warranty if caught.

Labor sections of warranties also require inspections by the manufacturer. But those are performed by the sales rep who calls on the sub. I can’t begin to count the number of times I’ve discovered those “inspections” listed on a log were picked from a calendar during lunch in some coffee shop - after project completion. The rep isn’t going to bite the hand that feeds him.

Gerard, to answer one question you had - the manufacturer generally issues the labor and material warranty and all claims run through the manufacturer. In only a few cases have I seen separate warranties (one from the manufacturer, another from the installer). No matter what product is involved a two-warranty system would be a hornet’s nest and a finger-pointer’s dream.

There is a separate contract, sometimes, between manufacturer and sub that ties the sub to the warranty (it’s becoming more common because the subs see it as better protection for them…ans usually they are correct).

Usually there’s not, and the reason is simple - there are so few claims against warranties they are primarily written (other than to protect the manufacturer, which is foremost) for approval in the submittal stage.

After the warranty has been cleared before the job starts about 1/3 (at least in the case of coatings and waterproofing) are actually issued as part of closeout, and of those most are lost or forgotten. During casual discussions with my attorney, who represents various parties in construction - large property owners, contractors, a few manufacturers and as I recall a few Architects - the number of warranties actually kept on file and needed is only slightly higher for equipment and “tangible” items; the one category that usually does have a warranty carried through the entire process is roofing.

I agree that for the most part a “clerk of the work” would be far more effective and cost effective - the ridiculous thing about the whole “warranty game” is that owners are paying for something that they almost never use.

Bob, to answer your last question, contractors cannot get an extended warranty from a manufacturer - they don’t buy the product and they are not the ultimate owner. Since approved or certified installers are normally required by the manufacturer, the contractor would be put in a position of either tying the original installer to the warranty…essentially the same as the existing system…or having to source an alternate installer, which creates a huge mess of complications. It’s something that’s come up several times on projects I’ve been involved with and quickly dismissed as a legal and administrative nightmare.

The only way warranties can be made effective is to write the required terms (and/or exclusions that are not acceptable) into each Section, improve the review of submittals in regard to warranties and have a specific party responsible for all final warranty review/collating before final payment is made.

But it is an expensive proposition.

[robert_w_johnson]

Jim

“Then there’s the issue Bob raises regarding the parties involved. In my experience written warranties are requested (as required in the Specs or as a sales tool) by the subcontractor, but parties named are the manufacturer and owner. The warranty creates a new contract between owner and product manufacturer - the contractor is out of the loop if there’s a problem and the sub is involved only if the warranty covers BOTH material and labor.”

I, with a few exceptions, do not require manufacturer’s warranties because of all the issues raised in the discussion above. For the most part, they may make people feel good, but they are not worth much. I require the extension of the warranty or the correction period on some work results - note work results not products. You use the general term “warranty” but what you are really talking about is “manufacturer’s product limited warranties.” There are warranties besides “manufacturer’s product limited warranties.”

“Bob, to answer your last question, contractors cannot get an extended warranty from a manufacturer - they don’t buy the product and they are not the ultimate owner. Since approved or certified installers are normally required by the manufacturer, the contractor would be put in a position of either tying the original installer to the warranty…essentially the same as the existing system…or having to source an alternate installer, which creates a huge mess of complications. It’s something that’s come up several times on projects I’ve been involved with and quickly dismissed as a legal and administrative nightmare.”

Under AIA documents we have an unlimited warranty and a one-year correction period - that is a provision of the Construction Contract between the Owner and the Contractor. The burden of proof becomes much more difficult under the unlimited warranty beyond the one-year correction period, but it is still possible to make claims. The Owner does not have any contractual relationships with the subcontractors or the manufacturers. The Contractor has contracts with the subs but not the manufacturers except for products he purchases and installs himself. How do defective work results get corrected during the one-year correction period? Does the Contractor do them himself? No unless it was his own work. Why do the subs get involved? Because of the provisions of the subcontracts. Why does the manufacturer get involved? Because of the purchase agrement between the subcontractor and the manufacturer.

Ok, now we take the one-year correction period, and we extend it on some work results to 2, 3, or 5 years by provisions in the Contract Documents. Do I consider the length of available manufactuer’s warranties in determining the extended time? Yes I do.
This again is a provision in the Construction Contract between the Owner and the Contractor. How are the relationships between the Owner, Contractor, subcontractor, and manufacturer any different because the correction period has been extended? It has nothing to do with the Owner or the Contractor getting an extended warranty from the manufacturer. Who is ultimately responsible? The Contractor. Does the Contractor make sure the liability is passed on down to the subs? Sure he does just like he does with the standard one-year correction period. The relationships do not change just because you have an extended correction period on some work results.

Under this type of arrangement, the A/E and Owner are setting the terms of the extended warranty, not the manufacturer. The terms of the limited warranties of manufactuers are not part of the this type of warranty. Let them play their games elsewhere!

[jim_sliff]

Bob - Excellent points. If we saw more attention paid to the AIA documents and unlimited warranty there would be a natural progression towards consistency. It’d make the whole “warranty” issue NOT an issue - just a normal part of the process.

I used the general term “warranty” as that term is used in an all-encompassing way by most Owners, Architects, contractors, subs and manufacturers. In my direct experience and observations when someone, somewhere in the construction process either specifies, requests or offers a “warranty” there is little or no differentiation noted between manufacturer’s extended warranties and unlimited warranties (the unlimited warranty seems to rarely come up, although the one-year correction period is a “gimme”). I’m trying to present a viewpoint “from the trenches” - years of document preparation/processing, precon meetings on various sides of the table and observation of what really happens once a project is underway. Reality is not part of the Construction Documents. Might be a good candidate for new Section…

Reality - either the Owner/Architect as a “team” wants a specific warranty or a manufacturer/sub “team” tries to sell one to get a specific product on the job. There are other scenarios, but these two seem to be the overwhelming reasons we see the darned things at all.

The contractor is in the middle and on the hot seat as the one with the prime contract. I’ve been amazed at how few read terms past “20 year limited material and labor warranty”. They receive a document with that title and pass it through. And sadly most are approved - whether the assumption is made that the contractor did his job screening them or there’s pressure to keep things moving (and terms are not read closely…or problems ignored) many “non-compliant” documents end up a part of the project.

But as noted previously, few claims are ever made against them. And unless a manufacturer or sub is trying to use one as a sales tool, the reaction of most subs bidding a project is laughter followed by looking at specified manufacturers and comparing their history as far as cooperation…and cost. The only liability thoughts on the part of the sub are focused on manufacturer’s dollar-limits and who determines “fault” (and how…).

Another issue - and perhaps something that should be in another thread entirely - is that many contractors do not provide bidding subs with anything more than a set of plans (and often just a partial set) and what they perceive as “trade specific” Specification Section(s). Most will also include “Submittals” and possibly “Requests for Substitutions”. But they may be missing critical parts of the Project Documents.

The sub and the manufacturer may never see warranty requirements unless they request (and buy) a full set of documents. Also, many subs who DO receive full sets don’t bother to look for anything beyond the one or two sections that relate to their work (many don’t have a clue WHERE to look anyway). It’s dumb, I know - but it’s reality.

I agree completely with your reasons for not using them and wish more projects handled warranties through the contract documents you mention. The “normal” system is so fragmented, contradictory and useless (except to a manufacturer as a sales tool - THAT part, no matter how irrelevant it may be in practice, works in many cases) that except for your use of the AIA documents I tend to agree with Gerard’s thought that maybe we’re better off with no “extended warranty” at all.

[robert_w_johnson]

The system also works with other than AIA documents. Most other general conditions include a one-year warranty. You just extend the one-year warranty on selected work results.

Why we habitually specify manufacturer’s warranties is beyond me - we are just playing the manufacturer’s games according to their rules. There are exceptions where the installation of a single product is not such an important factor or as crucial to a successful building. Shop applied PVDF coatings, insulated glass units, and interior wood doors are some examples. Those type of things are very different from a roofing or waterproofing system with multiple field installed components where both the materials and the installation are very important to a system to keep the building envelope from leaking on a long term basis. Why would you want a manufactuer’s limited warranty determine what is a defect and the conditions/limitations of the warranty for a crucial building envelope system when there are other methods available where you and the Owner set the terms of the warranty? Doesn’t make any sense to me.

[jpjordan]

I am surprised at the discussion of the “one-year warranty” in the General Conditions. Although it is modified, the “one-year” period relates to a “correction period” for work which does not conform to the Contract Documents. Items needing such correction may not be “defective” from the perspective of a manufacturer, it just doesn’t comply with the Drawings and Specifications. It may be “better” or it may not be as good; it just isn’t what was drawn or specified. There is an option for the Owner to accept such work, but this has other ramifications; i.e., the Owner can’t accept regular 1/2-inch gypsum board where fire-resistive construction (which requires 5/8-inch Type X gypsum board) is indicated and required by the authorities having jurisdiction. In this case, what has been installed is perfectly good stuff and may meet any warranty the manufacture may give; it just isn’t correct (and isn’t legal). It really doesn’t matter if the Owner wants to accept it, it must be corrected.

In this case, the Contractor’s warranties come into play. These warranties are from the Contractor (not a manufacturer or an installer) and state 1) that the Work will be performed according to the Contract Documents, 2) products used in the Work will be new unless otherwise indicated (we can reuse that historic marble pediment that dates from the 1880s), and 3) products will be free from defects that are not inherent in the materials (we can use natural product that have knotholes or veins if that is what we want). These warranties are not subject to the one-year limitation.

One of the tricks in all of this is that a manufacturer warrants a product that a 3rd party will install. That 3rd party is inherently not in a position to warrant materials, but may give some sort of warranty or guaranty for the installation. GM may be able to warrant materials and workmanship, but Contractors and their subs who want to give a warranty for materials and workmanship are really not in any position to take on this liability (especially the Contractor). What this really means in the best case scenario is that the Contractor will “service” the building for a period of time (at least a year, but in our market some Contractors will go 5 or 10 years), serving as a single point of contact if something goes wrong. It really isn’t a warranty, but that’s what it sounds like to an uninformed Owner (and Architect).

[robert_w_johnson]

AIA A201 3.5 Warranty: The Contractor warrants to the Owner and Architect that materials and equipment furnished under the Contract will be of good quality and new unless the Contract Documents require or permit otherwise. The Contractor further warrants that the Work will conform to the requirements of the Contract Documents and will be free from defects, except for those inherent in the quality of the Work the Contact Documeents require or permit. Work, materials, or equipment not conforming to these requirements may be considered defective.

AIA A201 12.2.2.1: In addition to the Contractor’s obligations under Section 3.5, if within one year after the date of Substantial Completion of the Work or designated portion …, or by terms of any applicable special warranty required by the Contract Documents, any of the Work is found not to be in accordance with the requirements of the Contract Documents, the Contractor shall correct it promptly after receipt of written notice …

“Work will conform to the requirements of the Contract Documents and will be free from defects. The Contractor further warrants that the Work will conform to the requirements of the Contract Documents and will be free from defects” Is a leaking roof a defect? I think most people would say that it is, but to make it perfectly clear, I also so state under the Special Warranty. A watertight roof system becomes a requirement of the Contract Documents.

“or by terms of any applicable special warranty required by the Contract Documents,” I label my extended warranty (correction period) as a “Special Warranty” to correspond to the terminology of the General Conditions. The Special Warranties extend the one-year correction period and further define defects and corrections for the particular work result.

I really do not care about any manufacturer’s limited warranties except to keep my extended correction period within the time limits of available manufactuer’s limited warranties. The Special (extended) Warranty is provided for in the AIA General Conditions. None of the contractual relationships among the parties is changed by a Special Warranty. The obligations of the parties under the one-year correction period are just have an extended time period for certain work results with defects and corrections further defined for that work result to make them a Contract Document requirement.

I would not say the Contractor’s obligations are to “service” the building under the correction period (one-year or extended) as defined by the AIA General Conditions. They would seem to say much more than that - “The Contractor warrants to the Owner…” “The Contractor further warrants …” “The Contractor’s Warranty …” “The Contractor shall correct it promptly…” There is no mention of subcontractors and manufacturers in the AIA General Conditions regarding warranty or correction period obligations - they are obligations of the Contractor.

Just as the Contractor is free to subcontract the Work as he sees fit, he is free to do the same with warranty and correction period obligations. If we stay out of his business in terms of subcontracts, why do we want to get in the middle of it in regard to warranties and correction periods?

I have been an A/E, owner, contractor, and consultant during my career (not brave enough to try the subcontractor world). From my experiences as a contractor, I have a pretty good idea of what contractors do to pass on the responsibilities and liabilites of the Contract Documents to those that they have subcontracts and purchase orders with. Then there is a lot of hassle involved in the enforcing of those obligations (fun if you have the right personality). As an Owner and A/E, I would much prefer having the Contractor to deal with all that rather than get myself in the middle of it. Much easier to deal with a single party that you have a contract with where you have defined the requirements, than to now create multipe new warranty contracts with multiple parties especially when the UCC provisions for Limited Warranties put a lot of the control of the game in their hands.

[sheldon_wolfe]

“The Contractor warrants to the Owner and Architect that materials and equipment furnished under the Contract will be of good quality and new unless the Contract Documents require or permit otherwise. The Contractor further warrants that the Work will conform to the requirements of the Contract Documents and will be free from defects, except for those inherent in the quality of the Work the Contact Documeents require or permit.”

Hmm… Something to think about when re-using materials. Without specifying that re-used lumber, or insulation, or whatever, is expected to perform the same as when new (or to some other standard), it seems the contractor is off the hook if something doesn’t work. Simply requiring the use of used materials, without defining required performance, makes the designer liable.

[mark_gilligan]

What happens if you require the reuse of existing products from an existing project as part of a Green/LEED mandate and it does not comply with the tests that you subsaquently had performed on them?

[jim_sliff]

Sheldon - the re-use issue is indeed a can of worms; reuse of one component might require changes in a dozen Sections and void “normal” manufacturers’ warranties.

Bob - I really like your approach to the matter (and appreciate you sharing it). Some great stuff to even for us oddball specialists.

One thing might be a fly in the ointment, however: you mentioned "If we stay out of his business in terms of subcontracts, why do we want to get in the middle of it in regard to warranties and correction periods? "

Many times the subcontractor IS decided in part by the Specifier. We commonly see specs requiring “certified installers”, a term included because it’s a requirement of the manufacturer. It’s often an important requirement to avoid problems, but it can be manipulated in other ways.

I’ve seen many situations where guide specs were supplied to an Architect or Engineer…and used as the basis for a Section…by a subcontractor or manufacturer with language ensuring that subcontrator is the only qualified one within 1000 miles. The contractor has no viable options - he either has to use what is essentially a “sole source” or jump through hoops to try to get a substitution approved. He usually won’t hassle with it.

With larger manufacturers “certified installers” have gone through some sort of training (usually) or are known to have extensive experience; with smaller manufacturers “certification” is often a “product” for them - a subcontractor has to pay to play (there’s usually training involved but it’s very often generic nonsense).

This is not common in new construction but very common in large-scale rehab and building conversion work. In most cases it also involves products where extended warranties are part of the package, which is where it ties in to the quoted statement.

When I was on the subcontractor side I had rehab projects where the situation became so obviously complicated prior to bid that there ended up being multiple prime contracts - the oddball stuff removed from the “primary” contract specifically to get the contractor out of the mix.

I realize most Specifiers who deal with new construction may never encounter these situations, but some who deal mainly with rehab, historic restoration and mixed-use conversions see them (at least in my experience) on a regular basis.

And even with all the chess-playing that goes on with extended warranties a part of the mix, the reality is (as noted earlier) that the documentation is rarely handled properly.