Watch Your Language
Written limited warranties are exceptionally good tools for defining the expectations of buyers and sellers regarding a product up-front. However, manufacturers and sellers should be aware that, despite the express terms and limitations of the written warranty, in other words, representations or statements concerning a product which are made outside the confines of the warranty (e.g. product information in sales material), may be latched onto by consumers and their attorneys in the course of litigation to allege that other “warranties” of product performance may have been created. That is why carefully crafted warranty language and the use of effective disclaimers are critically important to limit risks. Energy performance is one area to keep an eye on in this regard.
A recent example of an effort to head off these potentially expansive claims regarding product energy performance was found in the draft of a bill of federal legislation, the Energy Star Reform Act of 2017. In part, the Act endeavored to subdue efforts to claim that the Energy Star label was in itself a “warranty” of performance. The specific language stated that representations regarding a product’s compliance with the Energy Star program (i.e. a label) does not “create an express or implied warranty or give rise to any private claims or rights of action under State or Federal law relating to the disqualification of that product from Energy Star…” when certain conditions are met.
This bill stalled, and its fate does not appear promising, at least not in the short term. However, the proposed warranty limitation language of the bill is instructive. It highlights the importance of crafting language, which can effectively limit the legal ramifications of representations regarding product performance in the context of energy. It also addresses the ever-expanding litigiousness regarding product liability.
There has been an increase in litigated claims regarding products that allegedly fail to meet the performance levels of Energy Star. Plaintiffs seek recovery for claims that the Energy Star label creates a “warranty” or “promise of performance” at the specific program levels.
These claims are almost always in the context of electronic products. However, one case in Colorado involved claims relating to an Energy Star certified modular home, which the homeowners alleged breached a promise of Energy Star performance.
It appears that there will always be an effort through litigation to expand the breadth and scope of claims against manufacturers. In the context of energy performance, manufacturers would do well to consider the language and representations they use to convey their products’ energy performance, and whether those representations may create promises of future performance which are not intended. The use of effective language to limit those expectations is often the best way to limit the scope of potential claims.