It is always a good idea to “read the warranty” before making a major purchase, such as a new car or a home appliance. Warranties serve to limit the scope of the manufacturer or seller's liability should something go wrong with the product. Some warranties are defined by law. In New York, unless the seller makes an explicit disclaimer, there is an implied warranty a good offered for sale is “merchantable,” that is, it is fit for the item's ordinary purpose.
Express warranties, in contrast, are part of the contract between a particular buyer and seller. Express warranties can be an oral guarantee, but most are written in some form. Many contract disputes often turn on the precise application of such written, express warranties.
City of New York v. Bell Helicopter Textron, Inc.
Here is a recent example of a buyer thwarted by an express warranty. Interestingly enough, the customer here is the City of New York. Back in 2009, the New York Police Department purchased two air-sea rescue helicopters from Bell Helicopter. Both helicopters contained engines manufactured by another company, Pratt & Whitney.
More than a year after completing the sale, one of the helicopters suffered a sudden power loss while conducting a routine patrol over Queens. The helicopter made an emergency water landing, destroying the vehicle and injuring members of its crew. The National Transportation Safety Board investigated and determined a defect in the engine was responsible for the crash. For its part, Pratt & Whitney issued a recall notice about a month after the NYPD accident, acknowledging “an anomaly may exist” in its helicopter engine, which could lead to a sudden power loss.
The City sued both Bell and Pratt & Whitney, alleging breach of contract and breach of implied warranty. On June 16, U.S. District Judge Raymond J. Dearie dismissed Bell as a defendant. Judge Dearie cited the manufacturer's and seller's warranties included in the City's contract with Bell, which both contain “clear and conspicuous” disclaimers of any liability arising from a defect in Pratt's engine.
Now, there is a separate warranty with Pratt which guarantees against defects in the engine. But as Judge Dearie explained, this warranty is strictly limited to fixing or replacing the engine itself. It does not cover any “incidental or consequential damages,” that is, the loss of the entire helicopter. Nor could the judge find any other basis in the contract which would somehow render Bell liable for those damages.
Read Before You Sign
When negotiating a contract for the sale of goods, it is always critical to review any warranty provisions beforehand. Even if you do not anticipate any problems, it is still important to understand your rights in the event something unexpected happens. Once the problem occurs, it is too late to go back and rewrite the contract. And as the City of New York learned in the case above, the courts will not cut you any slack if you ignore the express, written terms of a warranty.
If you need advice from a qualified New York business attorney regarding warranties or any other contract matter, feel free to contact our offices at anytime.