Richard Brackenbury

Head of Construction

Construction Law


Warranty Woes

Richard Brackenbury

There has been much discussion on the NAPIT Forum about an installer’s obligations when goods supplied under warranty by a manufacturer turn out to be faulty.

At times this is a problem for NAPIT members and advice on what to do to get your money back is often hazy. I intend to bring some clarity to the matter.

For the purposes of this article, I will assume that the installer is supplying and fitting a light which has a reasonable life expectancy of three years under normal conditions.

The basic position

You have a contract with your customer and you are basically liable if something goes wrong. I will assume you have a straightforward contract which involves the supply and fixing of a light fitting.

You have bought the light fitting from your supplier in the normal way but it fails. Your customer has an absolute backstop of six years to bring a claim for a breach of contract – in this case the failure of the fitting.

But, although supplying defective equipment can be a breach of contract, whether it actually is will depend on what is deemed reasonable.

In our example, let’s say it fails after a year. You would be reasonably expected to replace it and that would mean you would have to supply the labour too. The fitting has fallen short of what is to be expected.

Your obligation to replace (and provide labour) comes from your statutory obligations.

This is the area of the law that sets out a customer’s minimum rights.

These will differ based on whether the customer is a private individual or a business. A guarantee will often say that statutory rights are not affected because the terms of the guarantee are over and above the minimum.

But, you say, the fitting should not have failed after a year. It should have lasted for three years. This seems unfair on you, so what can you do?

All will depend on the agreement that you have – small print again – with your supplier. Almost certainly, their liability will be set out and that will simply be to provide a replacement to you within a certain period of time.

This is likely to exclude any further loss – including the labour cost of the replacement.

The reality is that you are going to be stuck with that state of affairs.

The only way you can get around this is to have an agreement with your supplier that they will pay for your labour and replace the part. But it is unlikely a supplier is going to agree to that.

I will now assume that the light fitting fails after four years. Although, due to the limited cost of the installation, it is unlikely that such an argument would ever get to court, you could reasonably say that there was no breach of contract because the fitting had lasted longer than reasonably expected.

You would say to your customer that you will replace it but that they would have to pay both for the part and labour.

The extended warranty

I will work on the same basic facts as before. The fitting still has a reasonable life expectancy of three years, but, on this occasion, there is an extended warranty of five years.

I would not get too hung up on the words warranty and guarantee. There is a legal distinction but in this situation they are going to amount to very much the same thing – a promise to replace an item if it fails within a certain number of years.

Who gets the benefit of that promise depends on how it is written.

Often third parties – someone who was not part of the original contract for sale from the manufacturer – get the benefit. That might be you or it might be your customer, the original purchaser.

If the customer knows of that warranty at the time of your agreement with him, then you may well have an obligation, not only to supply, but to refit within the six-year period mentioned previously as well.

The reasonable person might well justifiably ask: “What is the point of buying a part with an extended guarantee if I still have to pay for labour costs? That is why I bought that fitting.”

How do you deal with that?

As before, the answer will lie in the wording of the contracts that you have in place with different people.

The supplier

Between you and your supplier, the issue is simple. Unless the supplier has agreed with you that they will pay the labour costs of a replacement, there is nothing you can do about it.

You have a commercial relationship with that supplier and generally speaking you are assumed to have agreed – and understood – the terms of any agreement under which you trade, even if those terms are written in small print.

The manufacturer

The same applies, but even more strongly, with the manufacturer. You never had an agreement with them in the first place and, although they gave the extended warranty, probably to improve sales, it is unlikely that its wording will allow for the labour cost. That warranty will exclude the obligation to pay for anything other than the replacement.

The customer

Probably the warranty was in the fittings’ box, left with the customer.

At the very least you will have a disappointed client if you refuse to replace. By now they think they have right to a replacement and cannot understand why they have to pay anything.

It is quite possible to set out in contract that after a given period of time – perhaps a reasonable period – you will accept no liability for the replacement and/or labour involved in making it, whether under the terms of any manufacturer’s extended guarantee/ warranty or otherwise.

Such a clause would almost certainly work. And it would be sensible to put in wording that removes any liability whatsoever under any circumstance after six years. That would deal with the eight and ten-year warranties some of you have seen.

But the law is far more supportive of individuals dealing as consumers than of business in this area. So, if you tried to bury such a clause in small print and your consumer challenged it, you may well lose.

Conclusion

The answer in dealing with any consumer contract is to make sure that it is written in plain English and easily understood. And, if wording works in a consumer contract, you can safely assume it will do so in a contract with a commercial customer.

You may have heard this message before from me but getting the small print right is the answer. There may be times where you might not want to rely upon that small print for good business reasons but at least you will have a choice.

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