If you’re a manufacturer or seller of window products, you’ve likely encountered a request to also include installation services along with the sale or supply of window products. Installed sales scenarios can arise in dealer and manufacturer/supplier contexts, and both carry some level of increased risk.
To prepare for and protect against future issues, it is essential to recognize the types of liability that can come with the product sale and accompanying installation services.
Of course, risk exposure exists for the sale or supply of the window or door product itself, separate and apart from any attendant service. This scenario is typically more straightforward—if there is an issue or a defect with the product, then the product warranty or terms and conditions associated with the sale of the product should address how such a situation may be handled. In the context of a claim, you have the opportunity to hold up the warranty to enforce its terms.
Approaches to limit exposure within the product warranty include exclusions of certain damages and limitations of certain remedies. Because state and federal law can impact your ability to properly limit exposure when it comes to the product warranty, it is a good idea to consult with your legal representative to ensure your warranty includes legal and enforceable provisions.
When you add in the installation component, the warranty may still provide some level of protection, but additional risk exposure arising from the installation services and any relevant contractual obligations attached to the installation require additional consideration.
Taking on the responsibility of installation, either directly or through a subcontractor, carries added risk. Recognizing the possible avenues of risk involved in providing installed sales is the first step to being prepared to prevent or at least respond in the event such risk occurs.
Providing installation of window and door products will typically involve a contractual relationship with the developer or builder entity, or directly to the property owner. In the developer/builder context, there may be an existing agreement in place containing standard provisions applicable across various projects and developments. Consult your contracts to gain a full appreciation of which contracts are in place, and the terms and conditions. Be on the lookout for any addenda to the contracts, as these can significantly alter the terms of an existing agreement.
Defense and indemnity provisions are commonly included in installed sales contracts.
These obligations could kick in as soon as you are provided with notice of pending or threatened litigation from the party to the contract. Defense and indemnity involve a significant amount of risk, so being aware of the existence of these obligations is key to understanding your responsibility and exposure to such risk, ideally before an issue arises.
In negotiating the terms of any contract, pay close attention to these provisions, and try to revise the language as much as possible to offer protections and limitations to that exposure. For example, specific notice requirements, limiting the scope of your obligations, and other potential revisions to “standard” defense and indemnity language, could help limit your exposure if the parties to the contract can agree on the front end.
Also watch out for additional insured provisions requiring you to name the other party to the contract as an additional insured under your company’s general liability insurance policy. These clauses are common in construction contracts with developers and general contractors; contracts for installed sales are no exception.
Similarly, if you take on the responsibility to install the window and door products you sell, but subcontract the installation to a different company, be sure to include the appropriate defense and indemnity requirements, as well as additional insured protections in your agreements with the subcontractors.
While everyone hopes to avoid getting into a legal dispute, setting clear expectations and requirements in the contracts can help all parties to contracts navigate these situations professionally and collaboratively as long as everyone is on the same page with respect to what will be required in the event of a lawsuit or threat of legal action.
Overall, the best approach is to rely on your product’s warranty to the extent possible. For any exposure falling outside of the scope of the product warranty, seek to incorporate protections into your contracts to proactively address issues that may arise.
Doing business contains inherent risk exposure, but there are a variety of tools and approaches to effectively limit your exposure and anticipate and protect against scenarios that could expand your risk. Working with your legal team to explore those options is the best approach to ensure you are fully taking into account the risks and addressing them prudently and in good faith.