#71: Product Warranties of Future Performance
Consider this scenario: Owner needs a new roof, and sees Manufacturer’s advertisement for “30-year shingles.” He picks up a catalog, which trumpets “30 year protection.” The limited warranty at the end states that if the shingles fail in the first 30 years due to manufacturing defects, Manufacturer will pay to replace them according to a prorated formula (the longer into the 30 years, the lesser the Manufacturer’s liability) but excluding the costs of tear down, disposal and new installation. Owner buys them, believing that they will last for 30 years.
In 15 years, the shingles fail and Owner sues Manufacturer for the cost of a new roof — including the tear down, disposal and new installation costs. Owner says that he has no recollection of reading the limited warranty, but relied on the Manufacturer’s marketing catalog, which gave the impression of an express warranty that the shingles would last 30 years. He points to Kelleher v. Marvin Lumber & Cedar Co., 152 N.H. 813 (2005), which held that a statement in window marketing materials asserting that the window would be “permanently” protected against rot was an affirmation or promise creating a warranty of future performance.
Under the Uniform Commercial Code governing the sale of goods, an express warranty is created by “[a]ny affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain,” or “[a]ny description of the goods which is made part of the basis of the bargain.” RSA 382-A:2-313(1). The seller can fashion the terms of its warranty and limit it in various ways — for example, by excluding liability for costs beyond repair and replacement. Unless a shorter duration is agreed to, a four year statute of limitations governs lawsuits for breach of warranty commencing on date of delivery, RSA 382-A:2-725(1) — but if the warranty “explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance,” then the clock starts ticking “when the breach is or should have been discovered.” RSA 382-A:2-725(2).
The alleged catalog promise in our hypothetical expressly extends to future performance, so Owner’s lawsuit is timely. Assuming that the limited warranty did not exclude all other warranties — a common provision in limited warranties — the remaining question is, how do we reconcile the two warranties? The New Hampshire Supreme Court’s decision in Faro v. IKO Industries, Inc., No. 2017-0325 (Jan. 26, 2018), sheds some light on this.
In Faro a homeowner relied on a shingle manufacturer’s marketing materials which “contained language, such as ‘30-year’ shingles, that would lead a consumer to believe that the shingles would last for the duration of the warranty.” The trial judge held that “the only representations in these marketing materials pertaining to duration are that the . . . shingle is backed by a ‘limited’ 30 or 35 year warranty” and therefore were not “guarantees that the . . . shingles will last for a particular number of years, but rather an affirmation that the shingles come with a 30 or 35 year limited warranty.” The Supreme Court agreed, finding no “representation of the defendant that the shingles, without limitation, would last for thirty or thirty-five years.”
The Faro case should be considered in connection with RSA 382-A:2-317’s admonition that “Warranties whether express or implied shall be construed as consistent with each other and as cumulative, but if such construction is unreasonable the intention of the parties shall determine which warranty is dominant.” The reasonableness of construing a catalog warranty as independent of a limited warranty contained in the same document has gotten a little dicier after Faro. If there is no reasonable way to divorce them, the buyer will be stuck with his remedies under the limited warranty, terms which are typically more favorable to the seller.