Tamara L. Karel
The company
manufactures consumer and industrial versions of its products
and warrants them accordingly. While the average consumer uses the
product once per week, the company designed it to be used a maximum
of once daily. The industrial product can withstand up to 20 operations
per day, and under harsher conditions.
In this particular instance, a customer purchased the consumer version
of the product and received the appropriate two-year warranty.
However, the consumer used the product more than three times daily
and in an industrial-like setting, a hybrid home/shop. The excessive use
and inappropriate environment caused a motor malfunction and extensive
damage to the entire product. When the company refused to honor
the warranty because of the inappropriate usage, the consumer sued.
The appliance company argued in court that the manner in which the
plaintiff used the product went far beyond what it considered normal consumer
usage, and therefore the warranty did not cover the damage. The
company further argued that the plaintiff, knowing the extensive use the
product would see, should have purchased the industrial version, which
would have been able to withstand the excessive use. The court disagreed.
It determined that the language of the warranty provided full coverage for
the product for the entire two-year warranty period, regardless of the extent
or manner of use by the plaintiff. The court awarded the plaintiff damages
for the product and for the company’s wrongful denial of the warranty.
Even though the warranty excluded “excessive usage,” it did not define
what usage was appropriate and under what circumstances the product
could or should have been used. To avoid this pitfall in the future, the
company has now revised its warranties and has narrowly tailored the
language of the exclusions, specifically defining “excessive usage” and
appropriately defining the end user.
In the industrial arena, a construction company successfully challenged
the wording of the exclusion provisions in a truck manufacturer’s
warranty. The construction company fully recovered the amount of damages
to its commercial truck when the power take off supplied by the
truck manufacturer was insufficient to handle the aftermarket construction
equipment that was added to the truck. There, the wording of the
warranty exclusion for “aftermarket equipment” was vague and ambiguous,
such that the ambiguity was construed against the truck manufacturer.
As with the appliance company, the truck manufacturer would have
benefited from more precise wording in its standard warranty.
The message here is, take the time now to review your warranties for
any vague or ambiguous terms which may create unintended coverage. It
may save you down the road.
Tamara L. Karel, Esq. is with the business law firm Benesch, Friedlander, Coplan
& Aronoff LLP, Cleveland, Ohio. Got a
question about safety? E-mail it to us at
mdeditor@penton.com.
Safety by Design
Edited by Lawrence Kren