Understanding Manufacturer & Contractor Warranties
Warranties can be a tricky thing for contractors. If you are installing a product, ordinarily the product manufacturer warrants the product as being free from defects. As the installer of that product, you are typically only responsible for your labor.
However, warranties aren’t always that straightforward. Sometimes the project owner or the general contractor may require that you provide some additional warranty. Typically, these additional warranties are spelled out in the contract. The unwary flooring installer can sometimes be caught off guard by these additional warranties, which might even extend past the usual manufacturer’s warranty. So it is important to review the contract carefully to fully understand your responsibilities to the owner or GC prior to signing the contract.
Of course, the problem becomes even more complex when the contractor is also the product manufacturer. For example, as a flooring contractor, perhaps you custom-cut, mill and install your own hardwood flooring, rather than order from a manufacturer. Now you are both the manufacturer, and provide a manufacturer’s warranty, and you are the installer, for which you owe an installer’s warranty. The warranties for each are different.
Typically, a manufacturer warrants that the product will perform its function for a specified minimum time, and that the product will be free from certain defects. For a hardwood floor, the warranty against defects likely includes minimum tolerances for knots, uneven surfaces, warping, etc. But, as the manufacturer, you can decide (to some extent) the length of the warranty you want to give, and this warranty is called an express warranty. It is “express” because it is explicitly stated to the customer or end user and goes with the product. Also, many manufacturers consider the installer the “final grader,” so if the product is installed with a visible defect, it could be the installer’s responsibility.
Here is where the law comes into play again. Most states follow some form of the Uniform Commercial Code (UCC), which includes a set of uniform laws pertaining to the sale of goods. Included within that set of laws is a law that provides that goods are subject to an “implied” warranty of merchantability. This means that, whether expressly stated, there is a warranty implied in all contracts for the sale of goods that the goods will be of a typical quality for the particular trade, fit for ordinary purposes for which they are used, and within the normal variances of kind and quality. Additionally, there is an “implied” warranty of fitness for a particular use, which means that if the manufacturer knows of the particular intended purpose and sells the goods to the buyer (contractor or owner), and also knows that the buyer is relying upon the manufacturer’s skill or judgment to select and furnish such goods, then the manufacturer implies a warranty that the goods are suitable for the buyer’s particular purpose. Either of these warranties may run for the length of time that may be longer than a typical express warranty, and they vary by state. To find out which states use the UCC, see “Article 2: Sales” at this Cornell University Law School website.
A manufacturer may contractually state that neither of these warranties applies. However, as to the warranty for fitness for a particular use, the manufacturer needs to be careful not to suggest, imply or outright state that the goods can be used for such purpose. For example, if you are a manufacturer of tongue and groove hardwood that is principally used for flooring, but you suggest or imply that it may be used in walls, you may expose yourself to a warranty claim if someone uses it for wall cladding and it fails.
As the installer, whether you manufacture your own goods or not, you are liable for and may give a warranty for the installation of the product. Such an installation warranty provides that you have installed the product correctly and that the product will be free from defects from incorrect installation. What happens frequently is that the owner will complain that there is a problem, and both the installer and the manufacturer will claim that the fault lies with the other. Typically, the installer claims that the product failed and advises the owner to contact the manufacturer; the manufacturer sends out a representative who will inspect the product, finding that it was not installed per the manufacturer’s instructions. As the flooring contractor, you want to protect yourself to the extent possible from such claims by knowing your product and only installing it according to the manufacturer’s instructions. Aside from express and implied warranties, the owner usually retains a statutory right to sue for product liability.
With all of these various warranties and potential liabilities, what should you do? Know what warranties you are willing to provide and what you are not willing to provide. Provide your express warranty in the contract, and to the extent permitted by law exclude any implied warranties you do not want to be responsible to provide. If you provide only a limited installation warranty, make sure the customer knows that. If the materials installed come with their own warranty, provide that warranty to the customer and ensure that the customer has good contact information in case of a claim.
Beyond all of that, the final warranty that you give as a contractor is your business’s goodwill. Within reason, you want to give good service and keep the customer happy so that customer will become a testimonial source or reference. That may mean occasionally going beyond a stated warranty. It may also mean using only reliable products you know how to use.
Reprinted from http://hardwoodfloorsmag.com