Enforcing Your Product Warranty — The Warranty Game
How to Win the Warranty Game
Jim Edgar, J.D.
Your new coffee maker quits working three days after you brought it home, your year-old faucet leaks, and your new double-glazed, argon filled, low-e coated, insulated vinyl window fogs up inside the glass every time it rains. You have a warranty claim, so you call the manufacturer's customer service line only to be told that "it's not covered". So you fume, maybe write a complaint
on one of those consumer complaint web sites, and buy a new coffee maker, faucet and window.
You're a wimp, a wuss, a panty-waist. You gave up too easily. Sorry to be so rude, namby-pamby, but there it is, you sissy.
I deal with manufacturer warranties all the time. StarCraft buys a lot of stuff, and some of it is going to have a problem. Well over 99% of warranty claims are handled by manufacturers or sellers quickly and satisfactorily, but some are not. If they are not, then that's when the going gets tougher, but the tougher get stubborn.
This article is for the guys and gals who are not going to take "no" for an answer. I'll show you how to win the warranty game nearly every time. What it takes is perseverance — something that manufacturers are pretty confident you don't have. In fact, they're counting on it — all the way to the bank. But if you do, then you will most likely win. It's really as simple as that.
First, we'll dissect warranties to find out what they're all about, then I'll tell you how to use them to your advantage to make an effective warranty claim, and, if you don't get satisfaction using the claims process, how to sue in court and win. The "sue in court" bit sounds pretty scary, but it's not, and is a valuable tool in winning the warranty game.
The Manufacturer's Express Warranty
An "express" warranty is the seller's written guarantee that a product will perform properly for a specified period of time, and a statement of what the seller will do to fix the problem if the product fails during that time period. When we talk of something having a warranty, this is the type of warranty we are talking about. It is considered to be a part of the contract you entered into with the manufacturer when you bought the product. You paid money and in exchange the company sold you the product and gave you a written promise to take care of some or all of the defects in the product for a certain length of time.
Moen Limited Lifetime Warranty
This warranty is fairly typical of faucet warranties, and better written than most. I have, however, rearranged some of the paragraphs so like topics are discussed in one place instead of being jumbled around as they are in the original text.
Moen® products have been manufactured under the highest standards of quality and workmanship…
This is marketing fluff, and can be disregarded. You'll find a lot of sales hype in a warranty which is for many companies actually a sales pitch disguised as a warranty.
…Moen warrants to the original consumer purchaser for as long as the original consumer purchaser owns their (sic) home…, that this faucet will be leak- and drip-free during normal use and all parts and finishes of this faucet will be free from defects in material and manufacturing workmanship…
This warranty expires when the original purchaser dies or sells his house, so it is not really a "lifetime" warranty since the original purchaser is likely to sell long before he or she dies.
If this faucet should ever develop a leak or drip during the Warranty Period, Moen will FREE OF CHARGE provide the parts necessary to put the faucet back in good working condition and will replace FREE OF CHARGE any part or finish that proves defective in material and manufacturing workmanship, under normal installation, use and service.
This is the section that tells you what Moen will do under the warranty to put your faucet back in working order. All it will do is provide "FREE OF CHARGE" any parts required to repair the faucet. That's it. That's all you get out of Moen.
This warranty is extensive in that it covers replacement of all defective parts and finishes.…
This warranty is not at all "extensive". It is about average for the industry. This section is just more marketing fluff.
…However, damage due to installation error, product abuse, product misuse, or use of cleaners containing abrasives, alcohol or other organic solvents, whether performed by a contractor, service company, or yourself, are excluded from this warranty. Moen will not be responsible for labor charges and/or damage incurred in installation, repair or replacement, nor for any indirect, incidental or consequential damages, losses, injury or costs of any nature relating to this faucet.
This is the section where Moen tells you what it will not do.
• Moen will NOT PAY for the labor cost of having a plumber remove, repair and replace the faucet. This is, of course, the expensive part of repairing a faucet.
• Nor will Moen pay for any "consequential" damages or injuries relating to the faucet.
A consequential damage is an indirect damage caused by a defect in the faucet to something other than the faucet itself. For example, your faucet leaks, flooding your kitchen. The damage to your kitchen is a "consequential" damage that Moen says it will NOT PAY FOR.
Except as provided by law, this warranty is in lieu of and excludes all other warranties, conditions and guarantees, whether expressed or implied, statutory or otherwise, including without restriction those of merchantability or of fitness for use.
This is Moen's disclaimer of any implied warranty of fitness or merchantability. In some states (see table below) such a disclaimer is completely ineffective — no more than a bluff. Disclaimers are usually written in bold or larger print to comply with the legal requirement that they be "conspicuous", and to make the disclaimer seem more imposing.
Some states, provinces and nations do not allow the exclusion or limitation of incidental or consequential damages, so the above limitations or exclusions may not apply to you. This warranty gives you specific legal rights and you may also have other rights which vary from state to state, province to province, nation to nation.
This is the section, required by federal law, where Moen admits without actually admitting that its attempted disclaimer of implied warranties and limitations on incidental or consequential damages probably won't work.
Replacement parts may be obtained by calling 1-800-289-6636 (Canada 1-800-465-6130), or by writing to the address shown below. Proof of purchase (original sales receipt) from the original consumer purchaser must accompany all warranty claims. …
…Moen will advise you of the procedure to follow in making warranty claims. Simply write to Moen Incorporated using the address above. Explain the defect and include proof of purchase and your name, address, area code and telephone number.
This is how you make a warranty claim.
Defects or damage caused by the use of other than genuine Moen parts is not covered by this warranty.
This bit is just to scare you into using Moen parts. It sort of sounds like if you don't you may void your Moen warranty, but such "tie-in clauses" are illegal under federal law, and can be disregarded.
This warranty promise is completely voluntary. No law or rule requires a manufacturer to guarantee its product. It can just take your money and deliver the product without making any promise to take care of defects. But, if a manufacturer does not make some sort of guarantee, would you buy the product?
A warranty is necessary to compete in the marketplace. In fact, increasingly warranties are marketing and sales tools. Manufacturer's of products with generous, or at least what appear to be generous, warranties, advertise the fact. Milgard, the replacement window company, has created quite a stir in the window world by offering what I think is probably the very first unlimited Full Lifetime Warranty on its replacement windows. Unless this turns into a financial disaster, this warranty is probably going to force other window companies to follow suit.
Ford offers a 36,000 mile, 3 year power train warranty on its small trucks, Dodge offers 100,000 miles or 5 years. For the first time in our company's history, we did not buy Ford trucks. If Ford thinks its power trains will last just 36,000 miles, we'll take Ford's word for it and look elsewhere. Marketing through warranty competition works, and encouraging this competition was one of the major goals of the federal Magneson-Moss Act (see below).
Warranty Games & Barnum Promises
Not that games aren't played with warranties. They are. Many product warranties are written to look like the company is promising a lot, while actually very little is promised.
Alside windows, for example, trumpets its lifetime "peace of mind" window warranty, but on careful examination the company promises only what the majority of window manufacturers promise — if your window is defective, it will send you some replacement parts. Its up to you to pay to get them installed. This is hardly what we could reasonably call a "peace of mind" warranty.
Most "lifetime" warranties are not really for your lifetime. If you sell the house in which a faucet is installed, most "lifetime" faucet warranties end, despite the fact that you may live on a few more years — albeit warranty-less.
Many warranty promises are completely empty. For example, nearly every vinyl window manufacturer warrants its product against peeling or delaminating — something vinyl cannot possibly do, but only a very few warrant their windows against warping or twisting, which vinyl windows do all the time.
I call these "Barnum promises", in honor of the famous showman, huckster and philanthropist,
Phineas Taylor (P. T.) Barnum, who reputedly sold a whole rail car-load of white salmon by promising that it absolutely "would not turn pink in the can", something white salmon cannot possibly do. A warranty against a defect that can't possibly happen looks good, but is really just puff and fluff — a totally hollow guarantee, a Barnum promise.
Warranties can be slippery things and understanding a warranty can be a challenge. Generous promises given in bold print at the top of the page are often taken away in the fine print at the bottom. Clauses in a warranty are often deliberately jumbled so it is hard to ferret out exactly what is being promised. Usually after carefully parsing a warranty for substantial content rather than marketing puff, I find that a product warranty actually promises very little. Most warranties promise you parts, but you have to pay to have them installed, and sometime to have them delivered. If labor is covered, most warranties require you to send the product to an "authorized service center" for evaluation at your expense before it will be repaired.
There are, however, real warranties available that offer real relief if a product or service fails. Take a look at Milgard Window's warranty which is the only full warranty I know of for a building product. (Download and read this warranty here.) The differences between this warranty and the Moen limited warranty above should be readily apparent. Milgard promises that if its window is defective, it will fix it or buy you a new window and install it in your house free of charge. It will pay for all transportation and delivery and it will even remove your old window to the landfill. If it gets any better than this, I have not seen it, so Milgard is our preferred vinyl window. If the company is this confident in its windows, then so are we, and more than happy to offer such a well-supported window to our customers.
The Magnuson-Moss Act
But, as obtuse and often incomprehensible as most product warranties are today, in former years they were even worse. It finally got so bad that Congress stepped in to put a stop to some of the major abuses. (Some of you may be old enough to remember those heady days of yore when Congress actually did something.)
Today, the federal Magnuson-Moss Act, defines the types of written or "express" warranties that may be offered by manufacturers and sellers of consumer goods. It requires that any written warranty be conspicuously identified as a "full warranty" or a "limited warranty".
A full warranty ("unlimited warranty" or just a "warranty") must meet every single one of the following five requirements:
1. No attempt is made to limit duration of warranties defined by state law, the so-called "implied warranties". See more on implied warranties, below.
2. The warranty applies to anyone who owns the product, not just the initial purchaser.
3. Warranty service is provided free of charge, including any costs of returning the product or removing and reinstalling the product when necessary.
4. After a reasonable number of attempts to repair any defect, the customer has a choice of a replacement or a refund.
5. The customer is not required to perform any duty as a precondition for receiving service, except notifying the seller that service is needed, unless it can be demonstrated that the duty is reasonable. It would probably be reasonable, for example, in the case of a broken power tool or appliance to ask the customer to box it up and send it to a repair center, but the company has to pay the cost of shipping.
A limited warranty is one that does not meet any one or more of these requirements. Almost all warranties are limited warranties because rare is the manufacturer who is brave enough to offer a full warranty. The Moen warranty shown on this page is a good example of a typical limited product warranty. It limits the warranty to the initial purchaser only. It promises only to replace or repair any defective parts, but specifically excludes any labor cost, or consequential damage, and seeks to disclaim any implied warranties. None of these limitations are allowed in a full warranty.
The Length of Warranty Coverage
Neither the Magnuson-Moss Act nor any state law requires that a warranty be for any specific time period. A seller is free to offer a warranty for any length of time it thinks is appropriate. But, the length of the warranty period must be "clearly disclosed" in simple, "easy to understand" language. "Easy to understand" however, has been very liberally interpreted by the courts. Today it means "easy to understand" by the average lawyer. For most of the rest of us warranty language is not all that "easy to understand". The language must not, however, be outright deceptive. If the company advertises a "lifetime" warranty, at least something in the warranty must be guaranteed for someone's or something's lifetime, even if everything else is guaranteed for just 10 days.
A manufacturer can also guarantee against certain defects for one length of time and others for a different period of time. "Lifetime" faucet warranties frequently include only a very short warranty term for "exotic" faucet finishes like oil rubbed bronze. The fact is that most of these finishes have not been around long enough for anyone to know how long they will actually last, so the companies are taking no chances.
Warranties "Implied" by Law
What is Merchantable?
Before the industrial age the principal of caveat eptor or "buyer beware" governed sales of merchandise.
Buyers were expected to inspect the goods to be purchased and assure themselves that they were of good enough quality to be "salable among merchants who dealt in such goods", or, in other words, "merchantable."
With the advent in the 19th century of mass production and trans-contenental sales of goods shipped by railroad, personal examination became increasingly impossible, so the courts began implying a seller's warranty that the goods received would conform to the seller's description of the goods. If they did not, then they were not considered salable among merchants, or, in other words, not merchantable.
After some further refinement and eventual codification in various state statutes, this court-made exception to caveat emptor became by the 1940s today's implied warranty of merchantability, which protects consumers from defective merchandise even though they are in no sense "merchants".
Every consumer product is sold with a warranty of "merchantability" and a warranty of "fitness for its ordinary purpose".1 These warranties are "implied" by law and automatically attach to every sale. The terms "merchantable" and "fit for purpose" are legal terms, and sound formidable, but they are not that complicated.
A product is merchantable if it is "suitable for the ordinary purpose for which it is used" at the time it is sold. A faucet must actually control water, a coffee maker must make coffee, a DVD player must play DVDs. See, it's simple! The law says that manufacturers2 make this promise automatically every time one of their products is sold to a consumer. They don't have to do the actual selling. If they merely place the product into the "stream of commerce", then they are responsible for its merchantability in the hands of the ultimate consumer.
The limitation of the common law warranty of merchantability is that a product must be merchantable only at the moment of sale. If it breaks 10 minutes later, the warranty of merchantability does not apply — the sale is over, so the warranty of merchantability has expired.
The fitness warranty fills in the gap. It requires a product to remain fit for its ordinary purpose for a reasonable time after the sale.
So, taken together, the implied warranties require
(1) that a product be fit for its ordinary uses at the moment of sale and
(2) continue to be fit for these uses for a reasonable period of time after the sale.
The two warranties overlap and complement each other. Say you buy a microwave that fails to turn on after a week or so. The fitness warranty says it should continue to work properly for a reasonable time, and it didn't. No one would consider a week to be a reasonable time. But, the fact that it failed after so short a time strongly suggests that it was probably defective at the time of sale, but the defect was hidden or "latent", and had not yet shown itself. Since the microwave was defective at the time of sale, even though the defect was not apparent, it was probably not merchantable as well as being unfit.
These warranties may not sound like anything much, but they are everything you need to collect the cost of repairing or replacing a defective product.
What Defects are Covered by Implied Warranties
Implied warranties do not protect against every single thing that can possibly go wrong with a product. They do not cover improper installation or setup, abuse, misuse, ordinary wear and tear, failure to follow directions, improper or incomplete maintenance, war, riot, insurrection, negligence, sabotage, criminal acts, extreme weather conditions, acts of God or of the government.
What they do protect against are problems caused by the design, engineering, and manufacturing of the product — usually lumped together under the term "manufacturing defects" — things over which the manufacturer has almost complete control. And, not every manufacturing defect is protected against. The defect must go to the an "essential" purpose of the product.
If the defect does not affect the core functions of the product, you probably are not protected by either implied warranty. If your gleaming white plastic coffee maker starts turning yellow after a few years, you probably have no claim under the implied warranties. The color of the coffee maker does not affect its essential purpose: making coffee. But, if your gleaming white vinyl windows start turning yellow, then you have a claim because appearance is an essential feature of windows. One of the core purposes of your windows is to enhance the beauty of your house.
But, what if you ordered the gleaming white coffee maker to exactly match the color of your gleaming white kitchen cabinets? Well, that may be a different story. Now the discoloration could fall under the "special purpose" doctrine of the fitness warranty, especially if you ordered a special white color (not in the manufacturer's ordinary line of colors), and paid a premium price for it. Your order of a special color had the effect of notifying the manufacturer that you had a special requirement of the coffee maker. And, that notice is the key to recovery under the special purpose fitness warranty: the manufacturer must know of the special purpose you have in mind for the product: in addition to making coffee in your case, it had to be gleaming white. The color now becomes a core feature of the product.
How Long Do Implied Warranties Last?
Implied warranties are promises about the condition of products at the time they are sold and for a reasonable time after the sale. They do not assure that a product will continue to perform forever. Everything is subject to the "it all turns to crap eventually" rule; or what scientists call "negative entropy" and lawyers term "ordinary wear and tear". Eventually, anything you buy will fail. But, implied warranties do require that the product be of "normal durability". A product that is not normally durable is not considered "fit for its intended purpose," and breaches the warranty of fitness.
Normal durability is, as you might suspect, a very elastic concept. Courts usually determine what is reasonable based on two things. The first is the general, commonly-held community perception of how long a product should last. The second is any specific representations the manufacturer has made about the durability or longevity of the product.
Almost everyone can agree that a faucet that leaks right out of the box is not reasonably durable. But what if it starts leaking 5 years later? Ten years later? How long does the common perception say an average faucet should work without leaking? Should a $5,000.00 faucet go for a longer time without leaking than a $50.00 faucet? What if the manufacturer advertised the $50.00 faucet as lasting a "lifetime". Does that influence the community perception?
Common perceptions and manufacturers' statements create what are known as "reasonable expectations" in the mind of the buyer that can influence the buyer's decision about which product to buy and how much to pay. You may not realize that you have certain preconceptions of the durability of a product, but you almost certainly do. If you buy a $2,500.00 Jura Impressa J9 coffee maker rather than a $39.99 K-Mart special, it's, at least in part, because in the back of your mind you expect the more costly coffee maker to be better made, more durable and last quite a bit longer than the bargain-basement model — and also to make better coffee, but that's neither here nor there for warranty purposes.
This is especially true if the seller advertises a product as being particularly robust or durable. Manufacturers have a lot of influence over a buyer's expectations of product performance through promotion and advertising. If the seller's claims would lead a reasonable person to believe that the product will last longer than competing similar products, the seller is probably going to be held to this higher standard. So, if you bought something advertised as a "lifetime coffee maker", your expectation that it should indeed last your lifetime becomes reasonable, even though the common perception is that a typical coffee maker would not last quite that long.
A lot of composite deck manufacturers were sued and had to pay up when their early promises of a "lifetime maintenance free" deck turned out to be a gross overstatement. Customers with decks that stained, cracked, fell apart and grew mold and mildew like it was a cash crop were frequently denied warranty recovery by companies claiming that the product warranty had expired. The courts, however, found that even though the express warranty had lapsed, the implied warranty of fitness for purpose supported the consumers' claims. In other words, if the company advertises a lifetime maintenance free deck, then it had better deliver a deck that is maintenance free for the consumer's lifetime. If not, the company pays. There is not a single decking manufacturer that now advertises a lifetime deck.
Disclaiming Implied Warranties
But, if implied warranties are automatic, how is it that Big Al down at Al's Super-Clean Used Cars can sell his broken down clunkers "as is" without any warranty of any kind? Simple. Thirty-eight states allow the sale of consumer products without an implied warranty if the seller clearly discloses the fact, that is, disclaims any implied warranties. But he must do it the right way for it to be effective. Big Al must …
Make the disclaimer in writing,
at or prior to the time of sale,
in a conspicuous manner so it will be noticed,
using language that makes it clear and unmistakable what warranties are disclaimed, and
provide you with an opportunity to examine and test the object being purchased prior to the sale.
Implied warranties on consumer products
cannot be disclaimed in the following jurisdictions:
District of Columbia
So, if Big Al informs you in writing that the cherry-red, candy-apple-flake '57 Chevy Malibu convertible with the white "real leatherette" top you are eyeing is being sold "as is" or “with all faults” or "without warranties of any kind", then this is an effective disclaimer of any implied warranty provided he also gives you a reasonable opportunity to examine and test the vehicle. If you decide not to examine and test the car, that's on you. Big Al is covered if he gave you the opportunity regardless of whether you took advantage of the opportunity. If you then buy the car, you are buying it while fully aware that you and you alone are at risk if it proves to be defective.
When describing how warranties work, almost every writer of law books uses the "buying a used car" example. Why? Because it is the type of buying situation that implied warranties were designed for — face-to-face negotiations over price and terms, and an opportunity to examine the product minutely before purchasing. When warranty law was codified, largely in the 19th century, at the dawn of the industrial age, it was assumed that all consumer transactions would take place just this way. It's the way your great-grandfather bought everything from horses to tooth powder.
But, in the internet age, automobiles (and horses) are just about the only consumer product still sold that way. The modern consumer buying experience in today's shrink-wrap retail economy is very different.
The Typical Retail Sale
Let's look at a more typical consumer sale.
You've been thinking about buying a DVD player since 1988 and decide now's the time. Prices will never be lower. So, you mosey over to Easy Eddie's Electronic Emporium. You find a player manufactured by Lucky Golden China Electronics Co. that you like the look of, and it's in your price range, so, you buy it. Ninety-one days later it stops playing DVDs. You immediately call the manufacturer's warranty number, only to learn that the express warranty on the device is 90 days. "But," you exclaim, "what about my warranty of fitness." Sorry, explains the customer service agent, we clearly disclaimed all warranties of merchantability or fitness in the documents you received with the player. You go back to look at the instruction manual in the pristine plastic envelope which you have heretofore never opened, and find that there is indeed a statement disclaiming all warranties of any kind except the manufacturer's 90 day express warranty. So, you're out of luck. Or, are you?
Let's break down the transaction at Easy Eddie's to see how it compares to buying a used car from Big Al.
Did you get the disclaimer at or before the time of sale?
Are you kidding? The disclaimer is buried in the box. You did not open the box until after you got home. The box is expressly designed by packaging experts to discourage opening in the store prior to sale. It is blister-packed, hot-glued, stapled, taped and shrink-wrapped. Its primary purpose is to protect the product, and that includes keeping it safe from manhandling by snoopy shoppers. So, you had no opportunity to read the warranty disclaimer ensconced deep in the packaging, and thereby get any notice of any disclaimer of implied warranties, until after the sale.
Did you have an opportunity to examine and test the product at or before the time of sale?
How could you? Commonly not only is "some assembly required", but "batteries are not included". If you did manage to open the tamper-resistant, fire-retardant, waterproof, high-security packaging and remove all the expanded foam packing without setting off an alarm, to extract the DVD player from the box while somehow eluding arrest and detention by Milton the Mall Cop for shoplifting and malicious destruction of store property, there's no place to plug it in. So, you don't even get to see the product in action until you finally master the "easy assembly" instructions (literally translated from ancient and honorable Mandarin), and put it together after several trial runs many weekends later.
Was the written disclaimer conspicuous enough to be grab your attention?
Conspicuous? It's not even visible — entombed deep inside the box, usually combined with the written warranty and typically co-mingled with assembly instructions (in seven languages), the operating manual, catalogs, coupons, "exciting" offers and other claptrap manufacturers commonly stuff into the package. Even after you open the box and extract all the paperwork included with the product, there is seldom anything, like a bright paper color, to distinguish the disclaimer from all the other reams of paperwork inside the box. Absolutely nothing about it commands your attention. Usually, the only way to find it is to actually dig for it with the patience of an archaeologist excavating a pre-historic burial mound, carefully examining the documentation one page at a time until you finaly stumble across it. You have to be dedicated, determined and persistent to find it at all. Hardly conspicuous.
So, the warranty disclaimer by Lucky Golden does not comply with the rules we learned at Big Al's, so it is not a legal disclaimer.
Internet Disclaimers and Continuing Sales
Because alsmost all implied warranty disclaimers are legally defective, they are legally ineffective in almost every jurisdiction, and, in fact, are little more than a big bluff. The sellers know their implied warranty disclaimers are probably useless, but hope the imposing legal language and bold print will fool you into believing that any implied warranties you might have had are now void. They aren't. So, don't be fooled.
Clearly the law of warranty needs to be updated for 21st century commerce. Current law of warranty is at least 150 years behind modern merchandising. And, internet sales are making the problem even more acute. Today it is almost impossible for a manufacturer to effectively disclaim an implied warranty.
Not that manufacturers are not fighting back. They are. Just not very effectively.
One of the first gambits with the dawn of the internet age was to post a copy of the warranty on the web. Manufacturers argued that this made their warranties and disclaimers available to every potential customer long before the sale. They almost uniformly lost. The problem was one of notice and conspicuity. Consumer advocates argued that a disclaimer buried somewhere in the midst of of 4.5 billion (give or take a few million) pages of the World Wide Web is not in the least conspicuous or likely to be noticed. The courts agreed.
A more promising approach that has seen success in some courts, at least in California, is the notion of a "continuing sale".
We know that a disclaimer must be made prior to or at the time of sale. But, what if the sale is not something that occurs in that brief moment of time when the buyer exchanges money for the product at the checkout stand, but is reformulated to take place over several weeks? If the disclaimer is made during that extended sale period, would it then be effective?
Some courts have said yes. Here's the scenario: You buy a hair dryer from Big Box Appliance. Big Box has a 30 day no-questions-asked return policy. Amy time during the 30 days you can return the product and get your money back. Some courts have interpreted the thirty days to be a "continuing sale" period. When you check out at Big Box, the sale starts, but does not end for 30 days. During that "sale period" you can assemble, inspect, test and try out the product; and you have an opportunity to read the warranty disclaimer that came in the box. If you don't like the product, or the disclaimer, you can return the dryer, no questions asked. Since the disclaimer is "delivered" before the sale becomes final, it is considered to have been delivered at the time of sale.
The problem with this approach is that while it protects Big Box Appliance, it probably does not protect the manufacturer of the product. The manufacturer had nothing to do with the retail sales process. It also does not overcome the problem of "conspicuity" because the warranty is still probably buried in with operating and assembly instruction and not at all conspicuous or likely to be noticed even by someone emptying the box. In any case, outside of a few courts in California, the "continuing sale" doctrine has not been widely adopted.
Extended Warranties and Service Agreements
An extended warranty lengthens the period of the manufacturer's standard warranty period, typically for one to three years. You pay for this warranty. The amount you pay is usually based on the value of the product being warranted.
What you get for your money is absolutely nothing whatsoever. All the seller promises to do is to honor some (but not all) of the warranty rights you already own — given to you free of charge (except for the modest income, sales, occupation, use, property, and excise taxes you pay for the privilege of being governed) by the state as implied warranties. Why would you pay money to buy legal rights that you already own?
What a profit maker! P. T. Barnum would be so jealous!
Service agreements are also suspect as extended warranties in disguise. What they promise is, if the product breaks, the company will fix it. This duplicates the implied promise the company has already made in selling the product with an implied warranty of fitness attached. So, again, why would you pay good money for a right that you already own?
In my opinion extended warranties and most service agreements barely escape being outright fraud. In effect the store is selling your something you already own, and in any other circumstance such a sale would be considered a con game subject to criminal penalties. So, here's the simple rule: Never, under any circumstance or condition, buy the extended warranty. It's a sucker's game. Buy a service agreement only if it offers substantial benefits not already available under the implied warranties you already own — for example, same day, on site service for your critical home office computer.
Registering a Warranty — A Little Trap for the Unwary
But, there is at least one trap here that you need to avoid. Let's say your computer stops working within the wimpy 90-day warranty period offered by Vary Cheep Computers. So you call the company to make a claim, and fill out the paperwork and send it in. You may have just accepted the disclaimer of implied warranties contained in Vary Cheep's written warranty. Here's the legal reasoning:
When you make the claim, you impliedly accept the express warranty terms offered by Vary Cheep — all of the terms. These terms probably include language similar to the Moen Warranty above that disclaims any implied warranties. The courts generally find that if you avail yourself of any of the benefits of a contract, then you are deemed to accept the entire contract. So, you may have inadvertently agreed to Vary Cheep's disclaimer along with the rest of the terms of the express warranty. Oops! So, even though Vary Cheep did not make its disclaimer until after the sale, you have subsequently "ratified" the disclaimer, and it is now effective against you.
So far I have found only one court case in which this argument was successful, so it is not widely known. And, happily, this trap is easily avoided. I'll show you how in the next section.
But, you may also "ratify" the manufacturer's disclaimer if you register your warranty. Most manufacturers' warranties offer the buyer an opportunity to register the warranty by filling out a registration card and mailing it in. It's a trick, don't do it. Registering may trigger an inadvertent post-sale ratification of the company's disclaimer of implied warranties. The legal reasoning is similar to the argument above: by registering the warranty, you acknowledge that the warranty and any disclaimer within the warranty is valid and effective against you.
So, here's another simple rule: Never register a warranty, you may be surrendering rights that you don't actually intend to give up. Besides, registering the warranty seems to compel most companies to start sending you bushels of junk mail and daily "exclusive" spam offers — it's reflexive and inate in the corporate DNA, they can't help it. But, since you don't want junk mail or spam, don't register.
But, some manufacturers try to trick you into registering a warranty by requiring registration as a condition of honoring their written warranty. Here's how this works. When you finally get around to reading the warranty that came with your new sofa, you find that the one-year limited "stain-gard" warranty against discoloration or staining of the fabric is valid only if your "activate" the warranty by returning a registration card or filling out an on-line form. Since you bought the sofa in part because you wanted the stain-guard protection, you register. Big mistake! You have probably just ratified any disclaimer of implied warranties and limited yourself to whatever protection the manufacturers written warranty provides. No matter the supposed benefit of registering, never register a warranty.
Consequential and Incidental Damages
Morton-Thiokol, Inc. designed and built o-rings that kept the Solid Rocket Boosters (SRBs) on the Space Shuttle from leaking fuel during take off. The rings had never been tested in cold weather. After all, the Shuttle was launched from Florida where it rarely gets cold. But, the temperature was unusually cold on January 28, 1986 when the Challenger lifted off from Cape Kennedy, and 73 seconds later an o-ring failed, the right SRB exploded and the spacecraft was destroyed.
What is Thoikol's liability under warranty?
It is certainly liable for the cost of the failed o-ring. This is the damage that the law terms the "direct" damage — the cost of repairing or replacing the product itself. But, is it also liable for the destruction of the shuttle? This is what lawyers call "indirect" or "consequential" damage, that is, damage that is caused to other things as a consequence of the failure of the product.
Let's look at another example, closer to home. The hose on your pull-out kitchen faucet becomes detached and sprays water all over your kitchen. Your cabinets, floor and walls are seriously water-damaged to the tune of several thousand dollars. The only direct damage is the defective hose, a few dollars at most. All of the other damage is consequential.
Is the manufacturer liable under warranty for damages to other things caused by failure of its product?
The short answer is "yes". The general rule is that you must be "made whole", that is, restored to pre-defect condition. These means, in the faucet example above, that you must be compensated not just for the broken hose, but all of the other damage that was caused by the broken hose. There are a lot of exceptions and gradations of liability, but generally the manufacturer is liable for consequential damages.
You have to show that the defect directly caused (lawyers say "proximately" caused) the damage to the other things: the o-ring failed which proximately caused the shuttle to explode, the faucet hose leaked which directly caused water damage to other components of the kitchen. But, if you can do that, the manufacturer has to pay for the damage.
But, there's more. Not only is the seller responsible for your consequential damages, it is also taxed with your costs of making and proving your warranty claim. These are called "incidental" damages in the legal world and include your cost of packaging and shipping the product to a repair center, the costs of having your plumber uninstall your defective faucet so it could be mailed to the repair center, the cost of hiring a forensic investigator to find out exactly why the do-da broke in the first place, and any other reasonable cost of making and proving your warranty claim, including, in most places, your attorney fees.
Disclaiming Consequential and Incidental Damages
But, like implied warranties of merchantability and fitness for purpose, consequential and incidental damages can be disclaimed. Not always. Most states do not allow consequential or incidental damages to be disclaimed in the sale of consumer products. And, even in states where disclaimers are allowed, just as in the case of the implied warranties, most disclaimers are ineffective.
The rules governing the disclaimer of consequential and incidental damages are much the same as the rules for disclaiming implied warranties: The seller must disclaim them in writing. in clear and conspicuous language designed to be noticed, prior to or at the time of sale. As with disclaimers of implied warranties, rarely is a disclaimer given at or before the sale, so most of the time if a consumer product causes consequential damage, you can sue for and collect the amount required to remedy the damage.
Many times, however, the boundary between direct and consequential damages if not a clear, bright line. Some damages could be either. If your faucet leaks, is the cost of hiring a plumber to replace the leaking part a direct or consequential damage? Most sellers would argue that it is consequential, and, therefore, not the seller's responsibility because such damages have been disclaimed. But here's another argument: The part supplied by the seller does not install itself, and the faucet is not actually fixed until the part is in place. In most states a homeowner cannot, as a matter or law, fix his or her own faucet. A licensed plumber is required for all plumbing work (check it out, I'll bet it's true in your state). So, the cost of hiring a plumber to install the part is actually a direct, not a consequential, damage.
Generally, if there is substantial consequential or incidental damage, any lawsuit is best left to a skilled lawyer who knows how to prove causation and damages.
For example, here is a lawsuit you don't want to handle yourself:
Your brand new coffee maker catches fire. The smoke detector, which should have sounded the alarm, failed, so you did not discover the fire until it had engulfed your kitchen. The fire was accelerated by partly empty paint cans negligently left open by the painters who were painting your kitchen cabinets. The fire safe that was supposed to protect the cash you were hiding from the government (and your valuable papers) was defective and allowed them all to burn to ashes. The roof over the kitchen caved in, caused in part by the weight of a third layer of shingles installed by a roofer in violation of the local building code that allows no more than two layers on a residential roof. And, finally, the fire department's response was unduly delayed when the pumper dispatched to your house was struck broadside by a drunk driver and crashed into a tree that was planted too close to the street by a homeowner in violation of a local ordinance requiring that trees be set back, away from the curb.
Unless you can sort out who is liable for what damage, then this is an area where you should not venture without legal help.
Enforcing Your Rights Under Warranty
So, your guaranteed-not-to-leak-for-your-lifetime faucet is leaking. What to do?
First, fix the faucet. This sounds a little like common sense, but a surprising number of people don't first fix the faucet. They leave it broken while dealing with the manufacturer's warranty claim process. This puts you at a disadvantage because you are sitting there with a faucet that does not work, which makes you impatient. Impatience is your enemy. So, first call the plumber and get the faucet fixed. Let the plumber worry about figuring out what is wrong and getting the parts and materials together to fix it. It's his or her job. If you have the notion that fixing a defective faucet under warranty is not going to cost you anything, forget it. You will pay the plumber first, then get your money back later. If the plumber decides the faucet cannot be fixed, replace it.
Get an itemized receipt from the plumber that details what was wrong and what was required to fix the problem. If you have not already done so, go find your original sales receipt. If we installed the faucet for you, we put your receipt, your warranty card, and a note with the date and time of original installation in a plastic bag and taped it to the inside of your sink cabinet. Even if you forgot where we put it, your plumber will find it. We recommend you do the same with every faucet in your house (also water heater, furnace, air conditioner, water softener, etc). Your original receipt should have the faucet model and possibly a serial number. If it does not, have the plumber put this information on his or her receipt.
Now you are ready to deal with the faucet company.
Step One: The Claims Department
Attitude is everything in making a warranty claim. Stay calm, don't get angry, don't be rude or abusive. The poor customer service agent you are dealing with gets enough of this from other, less enlightened, people. Get him or her on your side by being cordial and friendly. You want the agent to be in a frame of mind where s/he wants to be as helpful as possible because you're such a nice person. Answer all questions, even the dumb ones, as politely and patiently as you can. State your position clearly: The faucet leaked, you had to call a plumber to fix it, and you spent (fill in the blank) dollars to do so, and that's the amount you expect to be reimbursed.
You are unlikely to get a resolution on the very first telephone call. What you will get is a claim number, and a request that you fax or e-mail your supporting documents. Send in the receipt and plumber's bill. Make sure the claim number is written on every single page. A typical claim department is a mad house, somewhat less organized than the proverbial Chinese Fire Drill. Stuff gets lost all the time. Minimize the chance of it getting lost by identifying every page of every document with the claim number. Now, wait. You will get a call back in a day or two. If a week goes by and you have not heard anything, call them back.
Now, remember the little trap for the unwary? Here's how you side-step it. Along with the other documents you send to the manufacturer in support of your claim, include this notice:
This claim is not made under the written warranty offered by (Fill in the company name) but is made under the implied warranty statues and other applicable laws and regulations of the State of (Fill in Your State), including, but not limited to the implied warranty of merchantability and fitness for purpose.
Be sure you write your claim number on it, and that takes care of that trap. Keep a copy with your records and write on it the date and time you sent it.
Most likely the claims agent's authority is limited to sending out replacement parts, so that's the offer s/he will make. Since you have already bought the parts, this does not resolve your problem. So ask politely to speak to someone who can authorize a payment. You will probably need to explain your position all over again to the supervisor.
I have seen only one written manufacturer's warranty that promises to pay a plumber's labor to fix a defective faucet — from Ikea. All they normally promise to do it replace any defective parts (see the sample warranty above). That should not be good enough. The supervisor will tell you that he or she can only authorize the cost of the part. Ask him or her if there is someone there who can authorize the labor expense. If there is, ask to speak to this person, and restate your case. About one-third of the time, the Big Boss will realize that you have your ducks in a row and will just authorize the labor charge, and you will get a check in a few weeks.
More likely, however, the Big Boss will not agree to pay the labor, claiming that it is specifically excluded by the company's warranty. Your answer is: "I am not making a claim under your written warranty. I am making a claim under the implied warranties of merchantability and fitness for purpose as provided in the laws of the state of (fill in your state name), so what your express warranty says is not relevant." If they respond that the express warranty disclaimed all implied warranties, your response is: "Your disclaimer is ineffective under the laws of the state of (fill in your state name) because it was delivered only after the sale was completed, and is therefore not binding on me." Say these things with great confidence and authority because (1) you're right and (2) the more you sound like a lawyer, the more attention you will get.
Odds are good that the company will cave in at this point, and pay up. But, if they don't, then there's Step Two.
Step Two: The Legal Department
Sample Warranty Claim Letter
December 12, 2011
Really Big Faucet Company, Inc.
1333 Big Faucet Company Road
Lower Fairmount, N. J. 07830
Attn: Lowell Ridley, Esq.
Mail Stop: 404
Re: Claim Number 11-4443
I purchased your company's Model 1234 kitchen faucet on May 4, 2006 (receipt attached). On July 12, 2011 it began to leak. I had a plumber repair the faucet. He discovered that the leak was caused by a defective pull out hose which had become partly detached. The hose was replaced. The plumber's charge tor replacing the defective hose was $512.00 (itemized receipt attached). I have made a warranty claim for payment of this amount under the claim number referenced above, but the claim has been denied.
This claim is made under the implied warranty statues of the State of (fill in your state's name), including, but not limited to the implied warranty of merchantability and fitness for purpose. The product is not reasonably fit for the purpose intended in that the faucet was not reasonably durable, which lack of durability caused the faucet to fail in a primary function in ordinary use.
This claim is also made under Really Big's express warranty in effect at the time of the sale that guarantees this product against failure of workmanship in manufacturing. However, any claim made under Really Big's express warranty does not constitute a waiver of any rights I may have under any implied warranty or my agreement that any disclaimer of implied warranties made by Really Big in its express warranty document is effective in (your state).
Demand is made by this letter for payment under warranty of the amount of $512.00. I look forward to an affirmative response from you within two weeks of the date of this letter.
(Your City, State and Zip or Postal Code)
Tell the claims supervisor politely that you don't feel a resolution can be reached at his/her level, and may you please have the name and address of the head of the legal department. This is usually a lawyer, but may be a para-legal assistant.
Claims departments hate to have a dispute bumped to the legal department. It's a black mark on the old bureaucratic score card. So, at this point you will probably get an offer in compromise. Not everything you asked for, but something more than the original offer. If this is good enough, take it. If it isn't, then proceed.
Write a letter something like that at left to the legal department. Again, be polite, don't threaten. People, get oppositional when threatened. Your goal is to bring the legal department over to your side, since yours is the side of reasonableness and light. Don't go into great detail. The information in the sample letter, together with your original sales receipt and the plumber's bill is all you need. Be sure to include the original warranty claim number so the legal department can find the file.
Now wait. The legal department will evaluate the legal soundness of your claim. The first question they will ask themselves is "Will you win if you sue?" The second is "Is it worth our time and money to defend?" This is straightforward, bottom line, arithmetic. And the answer depends on whether they believe you will actually sue. But, a letter like the one at left suggests that you know what you're doing, and just might sue. Worse, you might even be a lawyer. That perception will get some serious attention from the legal department because they know lawyers will sue even when normal, rational people won't.
Don't expect a quick answer. Legal departments are usually under-staffed and overworked. Like claims departments, they don't make a profit, so manufacturers don't spend much money on them. So, wait. But not too long. Give it two weeks. If you have not heard back in two weeks, write a second letter restating your claim and enclosing a copy of the first letter with attachments. In your second letter, also give them a definite time limit to respond. Two weeks is enough. Wait some more. After two weeks, if you don't hear from them. you can consider their answer is "No".
But most of the time you will get a timely (by legal department standards) response restating the company's position — generally they will pay for parts, but not for labor, and strongly implying that you must be some sort of carpetbagging scallywag and fortune-seeker, daring to ask for more money than the company (out of the goodness of its warm and fuzzy, bottom-line-minded, profit-grubbing, corporate heart) has agreed to pay. Or, they may agree to pay for parts and some portion of the plumber's labor, "as a gesture of good faith" or "just for customer relations purposes". If this is good enough, take it. If not, then proceed to the next step.
But first, just for fun, send a letter thanking the legal department for their time and consideration, and asking whether the head of the department will accept service of summons on behalf of the company. This rather innocent inquiry usually gets a prompt response, and often an offer to settle, since it indicates you intend to sue. Nobody likes to be sued. And, Really Big Faucet Company likes it less than most, because it knows it cannot win.
But we won't sue yet. We will first explore alternative dispute resolution.
Step 3: Arbitration
A surprising number of manufacturers are not members of the Better Business Bureau. But many are. As members, they have agreed to use mediation and arbitration as a means of dispute settlement if a claim is filed by a consumer. File the claim. There is a handy online complaint form at Council of Better Business Bureaus, Inc.
Actually, you can also file a complaint against a business that is not a member of the BBB. It is less likely to be successful, but sometimes it works. The BBB publishes records of complaints, and no one wants a bad BBB rap as a business that has not resolved its BBB complaints.
BBB Arbitration is completely free in most areas, and everything, including the final hearing can be done by letter, e-mail and telephone. For a busy person such as yourself, it is ideal. In most instances you will exchange pretty much the same letters (or, more likely, e-mails) you have already exchanged. You will present your claim, the company will explain its position. You will respond with an explanation of why the company's position is not acceptable, and so on. The BBB representative assigned to your case will attempt to mediate a resolution. If mediation fails to reach a resolution agreed to by both parties, the BBB will set the case down for binding arbitration. Manufacturers hate binding arbitration. It's nearly as much trouble for them as a lawsuit. They have to prepare a case, send a representative; it takes time and costs money. Most of the time they will settle with you at this point.
If they don't settle, there will be a hearing before a trained arbitrator, usually a local lawyer, judge or business person in the community. Lots of retired judges become BBB arbitrators, so in arbitration you are quite likely to get a more experienced judge than you would in a courtroom. Within a few days you will get a finding, and almost 100% of the time, a binding arbitration award in your favor. Typically the BBB makes the company pony up the amount in dispute which is held in escrow pending the outcome of the hearing, so you get paid right away.
Step 4: Small Claims — The Peoples' Court
I have never understood why regular people avoid small claims court. It's the true people's court. It was set up just for us — people who know nothing about the law or how to sue someone, but who have a legitimate grievance that should be resolved. It's our chance to get even modest claims adjudicated by an impartial judge on a level playing field against even the biggest and most powerful of the world's mega-corporations — all without the bother and expense of hiring a lawyer. In fact, in small claims court, lawyers are actually banned (a very sound policy more of the institutions of our society should consider adopting). For your warranty claim, it's the perfect venue.
Every small claims court has a brochure or booklet on how to file a small claim. In addition, for most states an enterprising lawyer or two has written a "how-to" manual. This usually goes into more detail about the entire small claim process in your state, and is well worth checking out of the library or purchasing on line. To find out if one exists for your state, just Google "small claims court [your state]", and pick through the results. If someone has written a manual for your state, it will show up. Check the publication date, however. Some of these were written many years ago, and things have probably changed. There are also some general guides. The best I have found is from NOLO, publisher of the respected on-line legal encyclopedia, entitled Everybody's Guide to Small Claims Court. Most of this book is also available for free on-line, along with scads of other useful legal information, at the NOLO web site.
Sample Small Claims Complaint and Notice to the Defendant
STATE OF NEBRASKA FORM NO. CC 4:1 07/10 Appendix 4, Uniform County Court Rules
PLAINTIFF'S CLAIM AND NOTICE TO DEFENDANT (Small Claims Court)
(Court use only)
IN THE COUNTY COURT OF LANCASTER COUNTY, NEBRASKA
CRYSTAL E. CONSUMER Plaintiff,
REALLY BIG FAUCET COMPANY, INC. Defendant.
PLAINTIFF'S CLAIM AND NOTICE TO DEFENDANT
Plaintiff states that defendant(s) owes(s) and should be order to pay to me the sum of $ 512.00 and costs of this action, or return the property valued at $ N/A and the costs of this action because on
July 12, 2011 my Model 1234 faucet, purchased from defendant on May 4, 2006 (receipt attached) began to leak, causing me to pay a plumber the amount claimed of $512.00 to fix the leak (receipt and cancelled check attached). This faucet is warranted to be free from defects such as would result in a leak by implied warranties of merchantability and fitness for purpose, and by Defendant's express written warranty, but despite my having asked the Defendant several times to pay me the amount claimed, Defendant has declined and refused to pay this amount.
Plaintiff declares that the defendant(s) is (are) not a "person in the military service of the United States" as defined in Sec. 101 of the Soldiers and Sailors Relief Act of 1940.
I have filed zero small claims this week, and zero small claims within the current calendar year.
To the best of my knowledge and belief, the defendant(s) may be served at the following address:
c/o Roger Edam, L.L.C., Registered Agent, 1234 Lawyer Road, Lincoln, NE 68512.
My printed name and address as as follows:
Crystal E. Consumer, P O Box 00000, Lincoln, NE 68501-0000. Telephone: 402-555-5301
I elect to have the notice served on the defendants() by [ ] Sheriff/Constable [X] Mail [ ] process server.
DATE: Dec 12, 2011
PLAINTIFF'S SIGNATURE: ____________
DATE: Dec 12, 2011
SIGNED IN MY PRESENCE: ____________
Subscribed and sworn before me on the date last written above. (Notary Seal)
This Part to Be Completed by the CourtNOTICE TO DEFENDANT
This claim has been filed against you. You must appear before this court on the __________________, at
____________________ __.m at The Justice Center, 2nd Floor, 590 S. Ninth St., Lincoln, NE. If you do not appear, a judgment may be entered against you, together with costs of this action. You should read the information on the back of this claim notice. If you have any questions about the procedure, you may contact the Clerk of the Court in person by by calling 402-441-5555.
BY THE COURT: _________________________________
(Seal of the Court)
Filing the Complaint
Small claims court rules are fairly simple, but they are still rules, and you have to follow them. Find out what they are by calling the clerk of the court and getting a copy of the small claim rules and a complaint form. These are free. Read the rules. Read the rules again. Don't hesitate to call the clerk to explain any rule that is not clear. He or she will tell you s/he is not a lawyer and cannot give legal advice, then, after having made this disclaimer, will usually proceed to explain what it all means.
Fill out the complaint form, stating your claim clearly and succinctly just like you did in your initial letter. You might want to write a draft or two first, to get the word count down. Attach your receipts and other supporting documents to the complaint (these are now called "exhibits"), write a check for the filing fee, and send it in.
In a few days you will get back a stamped "official" copy of your complaint that has now been assigned a case or docket number by the court clerk. Accompanying the complaint, often just added to the bottom of the complaint document is a "summons". In Nebraska this is entitled "Notice to the Defendant". This is a court order requiring the defendant (the company, in this case) appear before the court on a specified date and time to answer your complaint.
Find a Company By Its Trademarks
Here's an old, lazy lawyer's trick for finding the state in which a corporation has its headquarters. It relies on the fact that almost the first thing a corporation does is register its name and logo as a trademark. Here's how to find it:
• The form displayed is for entering the information you want to search. The only item you are interested in is Search Term:. Enter the name of the company (without the Inc., LLC, LLP, etc.), such as "Home Depot" (without the quotes).
• TESS displays all of the registered trademarks containing the words Home Depot. Look for an entry that appears to be the basic company trade mark: In this case "The Home Depot". Click on that line.
• An entire page of information about the trade mark will be displayed. The only line you are interested in is "Owner:". This tells you the actual name of the corporation (or individual) that owns the trademark. In this case you will find that "Home Depot" is not the owner. It is just a trade name. The actual corporation name is Homer TLC, Inc., a Delaware Corporation.
Now that you know the true name of The Home Depot, and its probable stare of incorporation, go to the Deleware Corportions Search website and search for "Homer TLC". You will find that its registered agent in Deleware is Corporations Service Company, 2711 Centerville Rd., Suite 400, Wilmington, DE 19808. That's where you mail your summons.
You have just gotten the power of the state behind you, but the reason the documents were sent to you and not to the defendant is that it is up to you to actually "serve" the summons and complaint on the defendant.
The summons will be accompanied by a set of instructions on how to serve the defendant. Read these carefully. In most states you can hire a private process server or the sheriff in the county where the company has its headquarters to physically hand the summons to a corporate officer. But, the easiest and cheapest way to serve the summons and complaint is just to mail them to the company's resident agent by certified mail, return receipt requested. For under $5.00 in postage and fees you can get the U.S. Postal Service to do all the heavy lifting for you.
Every company that does business in your state has to have a registered agent physically located in your state. To find out who this is, you can usually just call the company's legal department. If that fails, you can look it up yourself on line at the state government web site of the agency that handles corporation filings. This is usually the Secretary of State's office. Almost all corporation filings are public documents and available for inspection. Usually a Google search on "corporation search (your state)" will find the right office. If you can't find it on the web site, you can usually telephone to get the information, or at very least, help with using the web site.
If the company does not do business in your state, then you have to look for information about the company in its state of incorporation. Generally this will be either (1) the state in which the company has its headquarters, (2) Delaware or (3) New York. You can usually find out from the company's web site its actual corporate name, and the state in which it is incorporated. Look in the "About Us" and "Contact Us" sections. The actual corporate name is important. Many companies do business under what lawyers call a "fictitious" name, and what everyone else calls a "trade" name, that is not its true legal name.
Corporation filings will tell you the name of the agent and his or her address. Usually it is a law firm or company that provides multi-state agency service. Mail the summons to the agent by certified mail, return receipt requested. You can do this at the post office. But we usually just drop in on the local SuperMart. One guy gets the coffee and Ho-hos, the other takes care of mailing the summons. Many super market stores offer this service at the customer service counter. So do some banks (but you can't get Ho-hos at a bank).
In about 10 days the post office will return the signed receipt to you. Make a copy of it for your file, then attach the original to the form you received from the court that certifies that you served the defendant in "the manner as prescribed by law." Don't forget to sign it. And, don't forget to mail it in. If you don't send in this form, the company is not considered served with summons, and does not have to appear in court.
One of three things will now happen.
To the company, getting the summons is a heads up that you are actually serious about your warranty claim. Most likely someone from the company will call you and offer you everything you asked for, because it is a positive pain in the posterior for them to actually appear in small claims court.
They can't just send a lawyer. Remember, lawyers are barred in small claims court. And, they can't just send one of their local sales reps. In most jurisdictions they have to send someone important — a representative who can actually speak for the corporation. If the defendant is a local store, you might get the store manager. But, if it was an internet sale, the company has a problem. Can you imagine even a junior vice president flying to your home town to defend a $500 lawsuit? I can't either. This is when the company gets really motivated to get you out of its hair. Don't forget to add the amount of the filing fee to your revised claim amount, and the cost of the certified service of summons. But don't get greedy and start piling on frivolous charges. If they get their dander up, you just may get to meet the junior vice president after all.
The second most likely result is that they just won't show up. A defendant does not have to show up in a civil case. If it does not appear, the law makes the assumption that it was because the company had no defense to offer to your warranty claim, and the court will usually, without any prompting from you, enter a default judgment against the company in the amount of your claim. But, just to be sure, ask for it, politely. This is a judgment you can collect on, and is just as good as a judgment after trial.
The least likely result is that the defendant will send a representative, and you will have a trial. It's rare, but it sometimes happens.
If someone does show up, you get a trial, which might seem scary, but actually is not scary at all.
There are no, or very few, rules or formalities in small claims court. Common civility is typically the only requirement. It's all very informal, friendly and non-intimidating. Half the time the judge does not even bother to don robes. Be polite and speak only when invited to by the judge. In a real courtroom, unlike what you see on TV, there is no yelling, jumping up, waving arms or pounding on the table. Don't waste the court's time being argumentative or interrupting the other guy. There are dozens of cases waiting behind yours, and the judge is a very busy person. Just present your case: stand up, tell your story, sit down and shut up. If the defendant says something you want to dispute, make a note of it. You will get a chance when it's your turn to speak again. Stand when addressing the court unless told otherwise. Don't object to anything. Perry Mason you ain't. You don't know what to object to. Don't be confrontational. You can ask questions of the defendant when invited to by the court, but do so politely. Don't try to cross examine. Cross examination is an art that requires a lot of skill and years of practice, and you have neither. Besides, the company's representative probably does not know anything useful. He or she was not there, saw and heard nothing, and probably knows bupkus about your warranty claim or the defective product. He or she is just a warm body sent by the company to fill its seat in the courtroom.
The judge conducts the show, so you don't actually have to know what to do. Each side just tells its story under oath. The judge will usually ask both parties questions to clarify the legal points, and also ask you for any receipts or other documents you have to support your claim. Here's what you should bring,
The original purchase receipt,
The plumber's invoice
A copy of the front and back of your cancelled check to the plumber,
If you replaced parts, the old parts so you can show the judge how they are defective.
If you replaced the whole faucet, the old faucet so you can show the judge how it is defective.
Of course, if the defective product is to big to carry around, like a window or your car, bring clear photographs instead.
You may also bring the plumber. He can testify about what he had to do to repair or replace the faucet and why it was necessary. If your plumber is reluctant to come, you can require his appearance with a subpoena. Your helpful small claims clerk will show you how to go about applying for a subpoena.
The company will defend by explaining that while they may owe you for the parts, labor is explicitly excluded by their express warranty. You will counter by telling the court that you are not claiming under their express warranty, but under the implied warranties of merchantability and fitness for purpose; which have no limitation on labor; your "lifetime" faucet leaked and you had it fixed; and this entailed a reasonable plumber's charge for parts and labor in the amount you are claiming in order to remedy the defect and make you whole again. The judge will probably be impressed that you even know all that stuff, but he or she won't act impressed. Never play cards with a judge. They have a poker face not to be believed.
You probably won't get a decision that day. Judges like to take matters "under submission" so they have a little more time to read the documents carefully and reflect on the evidence, but you will get your judgment in less than two weeks in most courts. The odds that you will win, barring a complete screw up on your part, are about 100%. In most jurisdictions the losing party (now called the "judgment debtor"; you are the "judgment creditor") has 20-30 days to pay the judgment.
Collecting the Judgment
But, keep in mind that a judgment is not money, it is the right to collect money and the right to get the court to help you collect. Most of the time the company will pay promptly because most state laws require corporations to pay judgments promptly. If it doesn't pay, send a letter to the president with a copy of the judgment demanding payment. If it still doesn't pay, you can execute or garnish.
Execution is not as ominous as it sounds and garnishment has nothing to do with how you decorate your grilled salmon pâté platter.
Execution is a legal process for taking property or money from the defendant to pay the judgment. The process is usually handled by the local sheriff who serves a writ of execution on the defendant, using any money he collects to pay the judgment. If this is not enough, the sheriff then auctions off any property of the defendant and uses to proceeds to pay the judgment. Any remaining funds are returned to the defendant, minus the Sheriff's "modest" collection fee.
If the defendant has facilities or property in your county, the process is fairly simple. But if not, then it gets much more complex. You have to go through a process of registering the judgment in the defendant's state and county, then request a writ from the court having jurisdiction in that county to execute on the defendant's property. It's usually not worth all the trouble, especially since garnishment is much easier.
Any one who owes the defendant money or holds any of the defendant's property or assets is a potential "garnishee defendant", and can be garnished. Garnishment is just the process of legally compelling a third party that owes the defendant money or has possession of the defendant's property to hand it over to the court, rather than the defendant, to satisfy the amount of your judgment against the defendant. The court then uses as much of the money as it needs to pay you, and returns the rest.
The defendant's bank is a good choice for garnishee defendant. Banks always seem to have loose money lying around. Also, anyone the defendant sells to is a potential garnishee. I like Home Depot, Wal-mart and Sears. They buy everyone's products and almost always pay in arrears, so they owe almost everyone money on any given day. And, they do business in every state, so they are conveniently nearby.
Finding Someone to Garnish
If you are not sure who to go after as garnishee defendant, you can find out exactly who owes the company money, and the name and address and account number of every one of the company's bank accounts in what is called a "debtor's examination". In some states the initial examination is by written questions called "interrogatories". Interrogatories is just a lawyerese for "questions", so don't be put off by the fancy name. You provide a list of questions that you send to the defendant who has about 20 days to answer them. My one "question" is always an easy one:
Interrogatory 1: Please state, individually for each such account, the full name, branch name, branch address, branch telephone number, account name and account number of any and all bank, savings, money market, investment or deposit accounts of any kind or nature, domestic or foreign, in which Really Big Faucet Co, Inc. or any subsidiary thereof, has any direct or indirect interest, ownership or right of withdrawal or from which the company can or may receive any direct or indirect profit or benefit.
Companies don't like to give out this information, especially in a document that is by law in most states a public document, which I could, were I mean spirited, publish on the web. So rather than answer, they will usually just pay up.
There is also an oral examination in most states. The process for forcing the company to appear for an oral examination varies from state to state, but typically you make an application to the court. The court then sends the defendant an order requiring it to produce a representative to answer questions about its finances. I usually ask for the Chief Financial Officer, figuring he or she probably knows a little something about where the company has stashed its cash. Your friendly small claims court clerk will help you with the application, after the usual disclaimers.
The company is not going to send its Chief Financial Officer, or anyone else for that matter, nor is it going to risk contempt of court by just not showing up. Unlike the trial, at which appearance is optional, the defendant has no choice but to appear when ordered by the court to submit to a debtor's examination. Small claims court may be a minor court, but it still has all the usual courtly powers, including the power throw people in jail when its orders are blatantly ignored. Most inconvenient, that "throw in jail" business. What the company will do is send you a check and ask you to please go away and never darken its corporate door again.
But, if the company does return answers to your written questions, or someone actually does show up to answer your oral questions, which s/he must do under oath, then you will find out where their assets are and who owes them money. Now you can proceed with garnishing these garnishment defendants.
How to Garnish
You fill out and file with the court (this can all be done by mail) an application for a writ of garnishment for one of more of these garnishee defendants. This is usually a form that the court clerk will happily give you for the asking. The court will send the writ which instructs the garnishee defendant to pay to the court any money it owes to, or holds on behalf of, the defendant/debtor; up to the amount of the judgment. The garnishee defendant responds either with money or a response form stating that it does not owe the debtor any money at the present time. You can send out as many garnishment writs as you want, as often as you want until the full amount of the judgment is paid. In most jurisdictions there is a small fee for a garnishment writ, but this is just added to the amount the company owes on the judgment (by the court clerk, you don't have to keep track of it). Usually, after the first one, the company pays. No one wants a reputation in the business community as a judgment deadbeat. But if it doesn't, well, you now know how to collect the rest.
So, there it is. You have enforced your first warranty claim. You are a Certified Warranty Warrior. One thing for sure, you won't hesitate to enforce the next one. And, if everyone used the simple enforcement tools readily available instead of just belly-aching on the world wide web, manufacturers would start taking warranties much more seriously than they do now, and there would be a lot less to belly-ache about.
If you go the distance and end up in small claims court, you will quickly find out how easy it is to use the court to enforce your warranty rights, and you will probably start skipping Steps 2 and 3 and go directly from making a warranty claim on the company to filing a small claims complaint. I do. I give the company one chance and 30 days to pay up, then I file a small claim. Most of the time I have my money in two weeks or so after filing. And, I have never had to sue the same company a second time.
Good luck, not that you'll need it.
1. In most jurisdictions the common law warranty of fitness for an ordinary purpose has been merged by statute into the warranty of merchantability so they is just one implied warranty in consumer sales. The warranty of fitness for a special purpose is still separate, however.
2. Almost all States have, either by statute or case law, extended warranty liability to also include merchants who ordinarily deal in goods of a particular kind — meaning that typically your local store or internet seller is also responsible for any breach of warranty. But, a casual seller of goods is not liable. So, if you sell you used Game Boy on Craig's List, the implied warranties are not enforceable against you.
About the Author: Jim Edgar received his Juris Doctor degree in 1980 after study at Georgetown University Law Center, the University of Nebraska School of Law and the McGeorge Law School at the University of the Pacific in Sacramento. He practiced for 16 years primarily in intellectual property and tax law before retiring to return to his first love, carpentry and cabinetmaking. He is a member of the State Bar of California and admitted to practice in the federal Eastern District of California, the 9th Circuit Court of Appeals and the U.S. Tax Court. He writes and lectures periodically on law and the remodeling industry.