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The express warranty as a method of obtaining product quality in industrial purchasing
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The express warranty as a method of obtaining product quality in industrial purchasing
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Content
E E, RE, S .T R TY AS ET D
BT I1 I r PROD1JCT lJ LI
TIA PRC A I NG
A Thesis
Presented to
the Faculty of the School of rommerce
The University of Southern California
In Partial ulfill m ent
of the Requirements for the D e gree
iaster of Busine s A ministration
by
ohn . C. Olson , Jr.
a uary 1958
-
This thesi s , written by
J H M. C. 0 ~O ,
•
under the guidance of the
1
aculty Co mittee , and pproved
by all its mem ber , h been pre ented t nd cce pte d b
t he aculty of t ne ~chool of Commerce i n pa ti fulfill m ent of t he requirem ents for the degree of
'TE
ate 1 /
pproved
4
TABLE OF C ON ENT
CHA. PTER
I. THE PROBLE1'1 AND DEFINI'rI O N OF TERM USED .
• •
The Problem .•
• • • • • • • • • • • • • • •
Statement of the problem .
• • • • • • • •
Limiting the problem ..
Kinds of warranties ...
Importance of the study .
• •
• •
• •
• •
• •
• •
• • • • •
• • • • •
• • • • •
Definitions of Terms Used ..... .
• • • •
The buying negotiation .....•
• • • •
Buyer. .
Seller.
• •
• •
• •
• •
• • • • • • • • • • • • •
• • • • • • • • • • • • •
Machine tools
Manufacturer
Agreement. .
• • • • • • • • • • • • • •
• • • • • • • • • • • • • • •
• • • • • • • • • • • • • • •
Contract .
• • • • • • • • • • • • • • • •
Purchase
• • • • • • • • • • • • • • • • •
vvarranty . . . . . . . . . . . . . . . . .
Expres s warranty ............ .
Approach to the Problem .......... .
• • • • •
Concept of problem ..
Preliminary design •.
• • • • •
Raw material for study.
• • • •
• • • • •
• • • • •
• • • • •
No warranty clause ........ .
• • •
Organization of this study ..... .
• • •
PAGE
1
2
2
2
2
3
4
4
5
5
6
6
7
7
8
8
8
9
9
10
10
12
13
CHAPTER
Composition of warranty clause
• • • • • •
Acknowledgments.
• • • • • • • • • • • • • •
II. THE OBJECT EXPRESSLY WARRANTED .
• • • • • • •
Results of Survey .•.
• • • • • • • • • • •
Basic conformity.
• • • • • • • • • • • •
Defective Material .
• • • • • • • • • • • •
Terminology ....
• • • • • • • • • • • •
Manufacturing backgrou..~d .
• • • • • • • •
Meaning to manufacturer.
• • • • • • • • •
Meaning to buyer .....
Irreconcilable positions .
• • • • • • • •
• • • • • • • •
Defects in W orkmanship .
• • • • • • • • • •
Terminology ...... .
• • • • • • • • •
M anufacturing background .
• • • • • • • •
Proble ms
.
a s sembly in
• • • • • • • • • • •
Subcontractor's error .
• • • • • • • • • •
Meaning to manufacturer.
• • • • • • • • •
M eaning to buyer
• • • • • • • • • • • • •
\1orkmanship ve r us material .
• • • • • • •
Defects
.
Design . in
• • • • • • • • • • • • •
M anufacturer' s position .
•
• • • • • • • •
Buyer' s position
• • • • • • • • • • • • •
Problem
.
de s i gn . in
• • • • • • • • • • • •
Components Manuf acture by uppliers
• • • •
Li iting responsibility .
• • •
• • • • • •
• • •
11.l
GE
13
15
16
16
16
18
18
18
19
20
21
22
22
22
22
23
24
24
24
25
25
25
26
27
27
CHAPTER
Basis for position ..•.•.....
Practical solution . • . . . . . . . .
Patent Infringement .........••
Buyer' s protection ........•.
Usual conditions on buyer ...... .
• •
• •
• •
• •
• •
Possible solutions.
• • • • • • • • • • •
Performance ...
• • • • • • • • • • • • • •
O bject of both partie s .
• • • • • • • • •
Performance probl ems .....•...
• •
Summary on O bjects Expressly ,
1
/arranted •
• •
The object s warranted .
• • • • • • • • • •
Intent of parties ..
• • • • • • • • • • •
The missing warranty •.
• • • • • • • • •
•
lV
III.
TI E EXP RE ' "1 WARRANTY PERI OD .
• • • • • • • • •
PAGE
28
28
29
29
29
30
31
31
31
33
33
33
33
35
36 Starting Date of Period ..
• • • • • • • • •
Results of survey. . . . . . . . • . . . . 36
D ate of shipment. • . • . . . . . . . . . 37
Date of receiving .•........
Completion of install ation .....
• • •
• • •
Initial operation •.
• • • • • •
• • • • •
38
39
41
First production run. . . . . . . . . • . 42
The best starting date . . . . . . . . • . 43
Length of eriod . . . • . . . . . . . . . . 46
Importance of period .
• • • • • • • • • •
46
CHAPTER
IV.
v.
Results of survey ..
• • • • • • • • • • •
Discovery of defects .
• • • • • • • • • •
Summary on Express ~arranty Period ...
• •
Purpose of period .•.........
• •
Importance of starting date ..
• • • • • •
Correlation aspect ..
Conclusion on period.
EXPRES WARRANTY C ONDITION
• • • • • • • •
• • • • • • • •
. D PR HIBITION
• •
• •
•
Express arranty Conditions ....
• • • • •
Results of survey ......•.
• • • • •
Normal usage ......•........
Original ownership ........... .
Notification of defect ......... .
Eight hour shift ............ .
Express warranty rohibitions ...•....
Results of survey ............ .
Loss or damages ............•.
Unauthorized repairs .......... .
Installation expenses. . . . . . . . . . .
Summary on Conditions an
rohibitions .
• •
Protection for m anufacturer ..
• • • • • •
C O RRECTION OF DEFECT DER EXPRE0
Correction Proce ure ... . • • • • • • • •
Results of survey .... . • • • • • • • •
V
GE
47
47
48
48
49
50
52
54
55
55
55
58
61
63
64
64
65
66
68
70
7
72
73
73
CHAPTER
Right to i nspection •...
Return of defective p rt .
Replacing the part ....
• •
• •
• •
Summary on Correction Procedure.
Common procedure ...... .
Costs involve d ....... .
Effect on period ...... .
• • • • • •
• • • • • •
• • • • • •
• • • • • •
• • • • • •
• • • • • •
• • • • • •
VI. SUMMARY ON EXPRE S wARRANTY . .. .
• • • • • •
Compo siti on ....
• • • • • • • • • • • • •
M ajor component s .
• • • • • • • • • • • •
Basic ssumption s ..
• • • • • • • • • • • •
Party ri ght s ...
• • • • • • • • • • • •
Party obligati ons ..
• • • • • • • • • • •
Party privilege s .
• • • • • • • • • • • •
Party limitat i on s .... .
• • • • • • • •
The Problem s I nvol ve d ... .
• • • • • • • •
The buyer's moti ve ..
• • • • • • • • • •
M anufacturer' s f ea r s .......... .
Communications ifficulties ....... .
Defining quality ............ .
The buying negotiation .
• • • • • • • • •
ummary on Composition , Basic ssumptions
and r oble ms .............. .
Composi t ion ............... .
vi
GE
74
76
80
84
84
84
85
86
86
86
91
91
92
94
95
96
96
97
100
102
105
107
107
CHA P TER
Basic a ssumptions .
Problems •.••.
• • • • • • • • • • • • .. .. ', .. .,,
• • • • • • • • • • • •
VII. REVIE1d F TYPICAL CLAD E ..
• • • • • • • • •
iording of Typical Clauses
• • • • • • • • •
General approa ch
• • • • • • • • • • • • •
The objects expressly warranted ..
• • • •
The warranty period .....•
Express warranty conditions ..
• • • • • •
• • • • • •
Express warranty prohibitions ..
• • • • •
• • • • • • • • •
Correction procedure ..
Conclusion on wording ..
• • • • • • • • •
Focusing on Deficiencies .
• • • • • • • • •
The second ste p . . . . . .
• • • • • • • •
The object s expressly warranted.
The express warranty period ...
• • • • •
• • • • •
Expres s warranty conditions ..
Correction procedure ....•
Conclusion on deficiencies ..
• • • • • •
• • • • • •
• • • • • •
Completing the
The buyer's a
egotia tion . .
• • • • • • •
roach.
• • • • • • • • • •
Need for information.
• • • • • • • • • •
Use of information .
• • • • • • • • • • •
• • • • • • • • •
Challenging the clause .
The bargaining session .
• • • • • • • • •
vii
GE
107
108
109
110
110
11
113
114
115
117
117
120
120
120
124
125
126
126
127
127
128
128
129
130
CHAPTER
The seller's reaction. . . . . . .
• • • •
Mutual agreement ........ .
• • • •
Conclusion ........ .
• • • • • • • •
earch for quality ... .
• • • • • • • •
Using the tool ..... .
• • • • • • • •
Limitations. .
• • • • • • • • • • • • • •
VIII. CONCLU I ON D RECOMMEND TIO S ..
• • • • • •
The Buyer' s G oal • • • • • • • •
• • • • • •
The satisfying requirements .. • • • • • •
Approaching the Goal ..... . • • • • • •
M eans to the end . • • • • • • • • • • • •
Constructing the 1arranty• • • • • • • • • •
viii
GE
130
130
131
131
131
132
133
133
133
134
134-
13 5
Ruling document• • • • • • • • • • • · · · 135
Tailoring the clause .
• • •
• • • • • • •
Improving the r arranty ..
• • • • • • • • •
Meaning of quality ...
• • • • • • • • •
Correction pr ocedure ..... .
• • • • •
Using the arranty ...... .
• • • • •
BIBLI GRAPHY . . . . . . . . . . . . . . . • • • • •
AP ENDI
•
EN I B.
ample of Letter d res sed to 327
anufacturer
olicit ample
rr nty Cl
ource terial
of achine Tool s to
of tand
e s . . .
• • • • • • • •
• • • • • • • • • • • •
136
137
137
138
139
140
PPENDIX C.
PENDI D.
' tandar d Express Warranty Claus e s
Check-Li s t for the Review of
• • •
Expre s~
1
rranty Cl u se s . .
• • • • •
i x
PA GE
156
168
LI 'T F T BLE I
TABLE PAGE
I. Result of Solicitation
r e se t o
M achine
Tool M anufacturers for the
Pur pose of G athering Ex re s rr nty
Clauses
• • • • • •
• • • • • • • •
II. Comparison of Group ~ize--Comp
.
nie s
Offering an Expre s s
, '
rrant y C l us e
Ver sus Companie s Having no arranty
Clause. .
• • • • • • •
• • • • • •
III. The Objects Expre ssly
I
arrante --142
M anufacturers of Machine Tools ...
IV. rtarting D ate of Narranty Pe r iod--142
M anufacturer s of Ma c ine Tool s ...
• • • •
• • • •
• • • •
• • • •
V. Length of Warranty eri od--142 1anuf acturer s
of M achine Tool s .
• •
• • • • • • • • • • •
VI. Correlation of t arting Date t o Lengt h
of '.arranty erio --142 anuf acturer s
of Machine Tool s .
• • • • • • • • • • •
VII. Expres s , r r nty Conditions-- 4r M nufac -
• •
turer s of
c ine Too s . .
• • • • • • • •
VIII. Expres s
1
J rranty Prohib i ti ons--142
Manufacturer s of la chi ne Tools .. • • • • •
I . Element s of Correction race ure-- 42
l anufacturer s of
chine Too • • • • • • •
11
12
17
36
47
5
55
73
xi
T BL G
X. Use of Five M jor Component s in the
XI.
XII.
XIII.
Express arranty Clause--142 M anuf c-
turers of achine Tools ...
ording of Typical Clauses , The
• • • •
Ob ject s Expressly arrante d , ~ terial
and orkmanship .......... .
dording of Typi cal Clause s , The b ject
Ex pressly arrante d , C om ponent
M nufacture by upplier s ..... .
or ing of Typi c 1 Clauses , The Expr e ss
n
• • •
• • •
• • •
iJarranty eriod, otarting D te
Length of T furranty Period ...
• • • • • •
X IV. or ding of Typical Cl uses , Express
xv .
XVI.
. VII .
XVIII .
W arranty Con itions ...... .
• • • • •
or ding of Typical Clause s , Expre s
: arranty rohibitions ..... .
• • • • •
· or i ng of Typica l Cl uses , Expres
W rranty Correcti on roc edure s .
• • • • • •
\ or ing of Deficient Clau e s , The
bject s pre~ l y .arrante ..
or i ng of De icient C u se s , The
bject Expressly arran e , The
• • • • • •
erformance ·mitation ..... .
• • • • •
90
111
11
114
115
116
118
1 21
122
xii
T BLE P GE
I . : ording of Deficient Clause , The
Expre ss Warranty Perio, Indef inite
t arting D te s .
• • • • • • • • • • • • • •
124
X
•
T ./ ording
of D eficient C u s e s , Express
•arranty Con i t ions , ne hift
Ope r a t i on
• • • • • • • •
• • • • • • • • •
1 25
C TE I
THE R B LE · ND DEFI I TI ON OF TERM U ED
In the purchase of m achine t ool s , t he industr ial
buyer is usually seeking the mean t o i ncr eas e capacity fo r
the production of his particular pr oduct or pr o ucts by
present methods or by better and m ore economical m ethods .
The industrial buyer may be the entre preneur of a
small business enterprise, or t he purchas i ng agent of a
large, well-established organization . In any case , buyers
are anxious to procure a machine tool that will satisfacto rily perform the required job. This anxiety is generally
satisfied by three things: (1) t he reputati on of the
machine tool manufacturer; (2 ) the conf i den ce t ha t t he
buyer places in the machine tool m anufacturer' s l ocal
representative and s alesman; and (3) the written w arranty
that the machine tool manufacturer gives t he buye r . Jhile
the manufacturer's reputation is often based only on the
word of others, and since the buyer' s confidence in the
local representative and hi s salesman may be t ransitory ,
it remains that the written warranty i s t he onl y t angib l e
assurance of the quality of the ma chi ne tool and of its
ability to perform satisfactorily t ha t the buyer can secure
at the time of the purchase. A s a result , the written
warranty is a matter of gre a t i mportance to both the
machine tool m anufacturer and the buyer .
2
I . TE B E
Statement of the proble . It was the purpose of
this study (1) to analyze the co struction and the possible
interpretations of the standard express warranties that are
offered by the manufacturers of machine tools; (2) to con sider the problems involved in securing satisfaction for
both the buyer and the seller under such warranties; and
(3) to show how the express warr nty may be used as a
method of assuring quality in the purchase of machine
tools .
Limiting the problem . !lhen considering industrial
facilities as a whole , machine tools are a relatively small
segment . It was necessary to confine this study to such a
smal~ class of equi pment because of the fact that each par ticular segment has its own set of prob~ems . s the result
of a preliminary survey , it was decided that equipment was
too large a field due to the extensive range of items
covered by such a category . urther investigation revealed
that machinery was also too large a category because of
the different kinds, the lar e variety of each kind, and
the scope of the par ic lar pro lems involved . Conse
quently , the s b ·ec of this study is limited to machine
tool warr nties .
Kinds of warrantie . Warranties themselves re
ivi e into tot es. T e
11
· mp id" or "implie in law'
type warranties are those that have been enacted into law
and they are in force unless some provisions of the pur
chase contract expressly negate their effectiveness in a
particular case. This study is concerned only with the
"implied in fact" type or "express warranty" offered by
the machine tool manufacturers.
3
Importance of the study. In spite of the fact that
the express warranty is the only tangible assurance of the
quality of the manufacturer's machine tool that the buyer
can secure at the time of purchase, there is a tendency for
both the buyer and the seller to give the matter only per
functory attention. In many cases where it is given any
consideration, the standard warranty provision of the
manufacturer is written into the buyer's contract, or
incorporated by reference, wi t h little thought as to its
actual content. Sometimes the buyer and the seller recog
nize that the manufacturer's standard warranty clause is
available but it i s not incorporated into the buyer's
order. At other times, it i s simply overlooke d . The
importance of this study rests on (1 ) the fact that the
buyer of machine tools will strive, for his own benefit,
to obtain the best expre ss warranty possible within the
range of negotiation , all factors considere d ; (2 ) the fact
that the manufacturer must recognize that his reputation
is dependent not o ly upon the opi ion of the present users
4
of his product, not only upon the financial worth of the
manufacturer's organization, but also upon other factors
such as his effective operation of an express warranty
procedure; and (3) the fact that negotiations on the matter
of warranties can take place only prior to the execution of
the purchase contract.
II. DEFINITION OF TERMS USED
The buying negotiation. In this study, we are con cerned with the buying ne gotiation leading up to the pur
chase of machine tool s . It is assumed that the industrial
buyer is seeking a particular machine tool. The seller may
be the manufacturer, or the manufacturer's local represen
tative. The person who actually contacts the buyer is
usually the salesman for the manufacturer or the manufac
turer's representative. A proposal from the manufacturer,
including among other things a description of the machine
tool, its price, and the terms and conditions under which
it is offered , usually f orms the basis for discussion.
1
: fuen the buyer and the seller reach a "meeting of the minds "
relative to the specifications and price of the machine
tool, as well as t he terms and conditions , including
warra ties, of t he purchase co tract , then an a reement
has been re ached . This a reem ent is usually co firmed i n
writing by t he buyer in the purchas e orde r , by a letter , or
by s i nature o ccep ance on the eller ' s proposal or
5
sales order. vhen any o t he se is accepte by t he seller,
it constitutes the ruling document . ny warranty should
be expressed an should be a part of the ruling document .
While there may be many variations of this buying negotia tion for machine tools , some more elaborate and others less
complex , the fore going constitutes in general the essential
steps involved . For the purposes of this paper , the t erms
referred to i n the buying ne gotiatio for the p rchase of
machine tools , will be defined as f ol lows .
Buyer. The particula r buyer referre d to is the
person in industry who is responsible for the procurement
of ma chine tools . "A person who buys or agrees to buy
goods"
1
is the proper definition. The closest synonyms
are "purchaser" or "vendee."
elle r . "A person w ho disposes of goods for a
consideration "
2
is the pertinen t meaning for seller . The
closest synonym is "vendor." The parti cular seller made
r ef er ence to is the person who sells machine tools. Where
the sale is direct, t he seller may al s o be t he manufa cturer .
1
walte r . humake r and G eorge F . Longsdorf , The
Cyclope dic Law Dictionary (Chica go : Call aghan and Company,
1940), p . 136.
2
J ohn Bouvier, Law Dictionary, Volume I I I ( t . aul:
est ubli shi ng C ompany , 1914) , p . 3040 .
In other cases, the seller may be the manufacturer ' s
representative or the salesman of the manufacturer ' s
representative.
6
Ma chine tools . At one time, it was held that
machine tools were the machines that were capable of repro ducing themselves. The machines generally considered to be
in such a category were the lathe, the drill pres s , the
shaper, the planer , the milling machine, the grinding
machine and the boring mill .
3
However, today , machine
tool s are defined as power-driven machines , not portable
by hand , that ar e used either for the purpose of removing
metal in the form of chips , or to press , forge , emboss,
4
hammer , blank or shear metal . s a result of this broader
definition , other machines are now included in the category
such as reamer s , tappers , broa ches , lappers , honers ,
shears, all kinds of presses, forging and automa t ion
equi pment.
lanufacture r . The business organization engaged in
the working of raw materials and other components into
ma chine tools is the manufacturer . This organization not
3
Henry D. Burghart and aron xelrod , achine Tool
Opera t ion ( ew York : VcGraw- Hill Book Company , 1953) , p . 4.
4
ational achine Tool Buil ers ssociation , ~ chine
Tools To ay (Cleveland : ational achine Too Builders
ssociation , 1956) , p . 4.
only produces the machine tools themselves, but also
establishes the terms and conditions of sale, including
the express warranty provision.
Agreement. The bargain arrived a t by the consent of
the buyer and the seller i s an agree rnent. 5 This is some
times expressed as a nmeeting of minds ." The agreement in
this sense is verbal and not ritten. It is the culmina
tion of the negotiations leading up to the completion of
the bargain and prior to the prepa r ation of the written
confirmation thereof . During this discussion leading up to
the agreement, the express warranty should be considered
and any differences resolved.
Contract. The contract is the written confirmation
of the agreement reached between the buyer and the seller.
In some cases, it may be the quotation or proposal form
that has been prepared by the seller and which is accepted
by the buyer. At other times, the buyer may affix his
signature in acceptance of the seller's sales order. The
contract, in this study , will refer only to the written
purchase order that has been prepared by the buyer and
6
which is accepted by the seller . The buyer's pure se
5shumaker and Lon sdorf, _QQ . cit., p . 46 .
6
illiam • Burby , Business Law (Los A ngeles: The
a chool ress, 1949) , pp . 21- 22 .
8
order thereby beco . e s the ruling ocument in the transaction
between t he buyer and the seller .
Purchase. The transfer of property from the se~ler
to the buyer by a voluntary agre ement , for a consideration,
is the act referred to as a purchase .
7
W arranty. A warranty is a guarantee that property
8
is as represented . utated another way , a warranty is an
understanding by which the seller assures the existence of
certain facts as to the property that is sold .
9
1
arr anty
is another word for guar antee, and either word may be used
interchangeably.
10
Expres s warranty. The definition of an express
warranty, as cited in Section 1932 of the Civi~ Code of
the tate of California , reads as follows :
ny affirmation of fact or any promise by the seller
relating to the goods is an expre ss warranty if the
natural tendency of such affirmation or promise is to
induce the buyer to purchase the goods , and if the
?Albe r t . Gray, Purchase Law Manual ( ew York:
Conover-Mast Publications , Inc., 1954), pp . 1- 2 .
8
uniform Laws Annotated , ales , Volume I (Brookl yn :
Edward Thompson Company , 1950) , p . 38.
9J . H. Westing , I . V. Fine , and embers of the il
waukee ssociation of Purchasing gents ffiliated with the
National Associa t ion of urchasing gents, Industrial
Purchasing ( ew York : John iley & Sons , Inc ., 1955),
pp . 216-217 .
10 m erican aw Institute, U niform Commercial Code
(Brooklyn: Eward Thom so Comp ny , 1952) , p . 100 .
9
buyer purchases the oods relyin thereon. No affirma
tion of the value of the oods, nor any statement
purporting to be a statement of the seller's cpinion
only shall be construed as a warranty.11
For the purpose of this paper, the express warranty shall
refer to that portion of the manufacturer's ter sand con
ditions relative to guarantee of the machine tool being
sold, the wording of such express warranty having been
mutually agreed upon by the buyer and the seller, and having
been written into the purchase order or contract by the
buyer.
III. APPROACH TO THE PROBLEM
Concept of £roblem. The writer 's experience in
purchasing facilities, and especially machine tools, for a
large industrial business unit has revealed that the
manufacturers' warranties were often the subject of con
siderable attention. This was the case in particular when
some defect had been discovered . In resolving these
situations on an individual basis , many of the deficiencies
of the various standa r d express warranty clauses were
uncovered, to gether with the shortcomings in the procedures
employed in the use of such clauses. Further investigation
with such people a s 1 r . tua r F . einritz, editor of
11
,est's Annotate California Codes, Civil Code
ections 1619 to 1812 ( t. Paul : le st Publis ing Compa y,
1954), p . 657 .
10
Purchasing magazine , and 1r . ymond · . Brick , xecutive
Secretary-Treasurer of the Purchasing Agents ' ssociation
of Los ngeles, resulted in the conclusion that the express
warranty constitutes one of the major problems of a quasi
legal nature that confronts both the industrial purchasing
agent and the manufacturer today .
Preliminary design. Based upon the premise that the
express warranty involved difficulties for both the indus
trial purchasing agent and the manufacturer , it was
determined that conclusions as to the construction and
meaning of express warranty clauses would have to be based
on an analysis of a satisfactory sample of such clauses.
It was further decided that the problems involved in
securing satisfaction for both the buyer and the seller
would likewise be disclosed through the same analysis . In
the third place , it was concluded tha t most of the problems
relative to express warranties were concerned with the
matter of quality in the product being sold.
aw material for study . The basis for this study
was a reasonabl e sampling of the standard express warranty
clauses that are us ed by the manufacturers of machine tools
in the Unite d tates . From the Thomas Register and the
Index to dvertisers in current trade journals , the names
of over three h dred manufacturers were gathere • form
letter was prepared ad addressed to eac of these machine
tool manufacturers, asking or a copy of their standard
warranty clause as contained in the terms and conditions
offered to buyers of their machine tools . copy of this
form letter is shown in ppendix
•
The result of the request for copies of standard
e. xpress warranty clauses is shown in Table I below.
TABLE I
RE~ULT OF OLICITATIO1 DDRESSED TO MACHINE
TOOL MANUFACTURER FOR THE PUl={PO E OF
GATHERING EXPRE b \vARRANTY CLAUSES
Total Number of Inquires Mailed
• • • • • • •
LES
•
Number of Inquiries Returned
•
Because of Incorrect Address.
• •
1
Number of Inquiries Unanswered.
• •
146
Number of Replies Disqualified
Because Reply Indicated That
They
1
· ere Not Machine Tool
}lanufacturer s
• • • • • • • • • •
17
TOTAL NUMBER F REPLIE AVAILABL FO U VF:I..
•
327
•
163
11
The disqualifications noted in Table I resulted from a
careful analysis of each reply, which revealed in these
particular cases that the product involved fell into the
category of processing machinery , or machinery that was not
operated by power. It is noted from Table I that about
50 per cent of the inquiries addressed to machine tool
manufacturers were answered with replies that were suitable
for use i the survey .
12
_Q warranty clause. Of the 163 replies that were
received from machine tool manufacturers, a roup of
twenty-one stated that it was not the policy of their com
panies to offer a standard express warranty with their
machine tools. Jhile many of these companies indicated
that they would "stand behind " their product s , they never theless did no t have a formal warranty clause . The majority
of the companies having no standard warranty clause could
be classed as small business but their products were com
paratively as well known as their fellow machine tool
manufacturers who have warranty clauses. Table II shows
the relative size of the "no warranty" group to the total
number of replies available for the survey.
TABLE II
COMPARI O OF GROUP SIZE
COMPAN I E O FFERING AN EX PRE S vAR NTY CLAUSE
VERSU C OMPANIE RAVI G NO . \fARRANTY CLAD E
~ u.rvey Group
Total number of replies
available for the survey
• •
L
l
' "I
0 : umber of replies having
No . of
frs .
• • •
163
• • •
Percen
t ag e
.100
no ~arranty Clause ..... 21 .... 13
Total umber available for analysis . 142 •... 87
It follows t hat this study is based on the examinatio of
the express warranty clauses of 142 machine tool
manufacturers .
13
IV. ORG NIZ TIO OF THI TUDY
Composition of warranty clause. The preliminary
survey of the warranty clauses available for analysis
disclosed tha t their composition follows a general pattern
that clearly divides them in several parts , each part
dealing with a different aspect of the warranty. The plan
of this study is to consider each of these parts through a
presentation of the numerical findings of the survey, a
discussion of the interpretations involved, and a review
of the problems encountered by both the seller and the
buyer.
Chapter II will take up what is usually the first
part of the express warranty clause, namely an enumeration
of the objects being warranted . These objects are related
to the quality of the machine tool in such matters as
material, workmanship, design, construction, component
parts and performance .
Chapter III will be concerned with the period during
which the manufacturer will honor claims under the express
warranty clause. The importance of the express warranty
period turns upon the starting date of the period and the
length of the perio .
The express warranty is usually contingent upon
certain conditions that are imposed by the seller on the
buyer, such as runnin the machine tool on an eight-hour
14
per day basis, giving it normal and proper usage , maintain ing ownership in the hands of the ori inal buyer and
notifying the seller within a specified time if some defect
is discovered. any express warranty clauses also prohibit
the buyer from claiming reimbursement for repairs that were
not authorized by the seller, for consequential or indirect
damages, and for installation and lost time. These condi
tions and prohibitions will be considered in Chapter IV .
Chapter V will examine the procedure to be followed
by the buyer in the event that a defect is discovered
during the warranty period . This procedure covers five
major elements, such as the manufacturer 's right to inspect
the defective part, the buyer's obligation to return the
defective part to the manufacturer 's plant on a prepaid
freight basis, the manufacturer's obligation to replace the
defective part f.o.b. his factory, the manufacturer's
option to replace the part or to repair the defective part ,
and the manufacturer's commitment to replace or repair the
defective part free of char ge.
Having completed the analysis of the survey clauses ,
Chapter VI will summarize on the composition, basic assump tions and proble ms of standard express warranty clauses.
In Chapter VII , the preceding analysis will be
applied t o situations calling for appr ais 1 of s t andard
express warr anty clauses of ered by machine tool manufac turer . Some s t andar d ex res s arranty cl se s will be
examined, an approach for the exposition of deficiencies
will be established , and a pertinent procedure between a
buyer and a seller will be illustrated.
The conclusions and recommendations of the study
will be found in Chapter VIII.
V. ACK o , /LEDGMENT ~
For their suggestions and wise counsel, the author
wishes to express his appreciation to M r. Leiland ! . Shaw
of Los ngeles, C lifornia, and r. Bruce W . Kingsland of
Phoenix, Arizona.
15
C H PT II
THE OBJECT E PRE LY , ../ R TED
It is of primary concern to know what objects are
actually warranted in a new machine tool. This is one of
the fundamental sections to be considered in the analysis
of the express warranty.
The purpose of this chapter is to (1) examine the
results of the survey as to the objects warranted;
(2) resolve what these objects mean to both the buyer
and the manufacturer; and (3) explore the possible use
of other objects which are not now in common use.
Among machine tool manufacturers, there seems to be
general agreement as to the objects to be expre ssly war ranted, namely, workmanship and material. H owever, buyers
do not always allude to these objects with the same signif
ication as do manufacturers. Further, the matter of
performance is conspicuous by its absence. It is therefore
essential to an understanding of the express · warranty that
these differences in meaning and these omissions, be sub
jected to inquiry in order to gr a sp their significance and
the causative reasoning behind them.
I . RE ULTS URVEY
Basic conformity . It is oteworthy that practically
all of the machine tool manuf acturers consider defects in
material and workmanship to be the objects expressly
warrante d .
1
Table III shows how general this agreement
seems to be held by the manufacturers .
TABLE III
THE OBJECT ~ EXPRE LY -r A R ANTED
142 NUF CTURER O CHI E TOOL
17
The Objects Expressly Narranted
As Being Fre e of D efects
o . of
frs . Percentage
M aterial
• • • • • • • • • •
• • • • •
1
• • •
. 7
M aterial and D esign .
• • • • • • • • •
1
• • •
.7
M aterial, D e s i gn and Construction .
• •
1
• • •
.7
M aterial, Design , Construction and
orkmanship.
• • • • • • • • • • • •
2
• • •
1.4
Material, Design and ·Norkmanship
• • •
5
• • •
3. 5
M aterial and Workmanship
• • • • • • •
122
• • •
86 . 0
Construction
• • • • • • • • • • • • •
2
• • •
1.4
Parts.
• • • • • • • • • • • • • • • •
5
• • •
3. 5
Defects (as such) .
• • • • • • • • • • 3 • • •
2 . 1
TO TAL .
• • • • • • • • • • • • • • •
142
• • •
100 . 0
careful review of Table III shows that wher eas 86 per
cent of the ma chine tool manufactur ers specifically m ention
material and wor kmanship , the balance of 14 pe r cent ascrilie
to objects t hat have very close relationship . defect in
the de si gn of a machine tool can in many cases be found by
an ins pection of the workmanship and material resulting
from t ha t design . A defect in construction of a machine
t ool can in many cases be found by close examination of the
1 11
hen Disaster its , Are You Bolstering Buyer
Confi dence , ith
I
TIES." Industrial arketing, 41:2
(Febr uar y , 1956) , . 61 .
18
workmanship an m terial that went into the building of the
machine tool. Since all of these wars are concerned with
the matter and manner of which machine tools are built, it
may be concluded that there is general agreement that the
objects to be expressly warranted are material and
workmanship.
II. DEFECTIVE TERI L
Terminology. The phrase "defective material" may be
interpreted as "imperfect physically" or "physically incom
plete." The term is broad and covers a wide range of
conditions such as a missing screw of insignificant value,
a major flaw in the frame of a machine tool like a cracked
casting, or the use of a material that was not the proper
type for a particular purpose.
Manufacturing background. The material that is used
in the construction of a machine tool is a matter of great
importance to the manufacturer. Before any standard machine
tool is produced, the manufacturer first secures a set of
designs that describe in great detail each component part
of the machine tool, including a stock list that specifies
the kin of material to be use in the production of each
component part. Using these designs, the manufacturer sets
about the building of this new machine tool, buyin t e
materials and components as they are named on the stock
19
list oft e design drawings . fter this collection o
materials has been machined as required , the various com ponent parts are assemble , thus producing the prototype
model . This first unit is then tested in order to deter mine if its performance can satisfy the designer ' s
calculated speeds and feeds without any damage to the
component parts , as evidenced by defects in material . If
any material defects develop , the designer must find sub stitute materials that will provide the necessary perfor mance . Finally , the manufacturer produces a group of these
ma chine tools and puts each one through a series of tests
to determine that , among other things , the material will
satisfy customer· demand as to stability , rigidity , strength
and other desire attributes . Through whatever distributor
organization he has , the manufacturer sells these machine
tools to buyers . Wh nit is shipped , the manufacturer
feels that he has produced a machine tool that is construc ted of the most suitable material for that particular
application and that every component part is not only on
t em cine tool , but also is free of defects .
eaning to manufacturer. In view of this manufac turing procedure, hat does the manufacturer have in mind
when he warr nts his machine tool to be free of defective
material. The manufacturer thinks of efective material
in terms of cracked castings , bent gibs , le king gaskets ,
20
stripped threads on screws , missing teeth on gears and all
other defects that might cause damage to property or the
operator and impair the proper functioning of the machine
tool. w hile a missing part is technically a material
defect, the manufacturer is more likely to consider it an
oversight in ssembly or in the inspection procedure. This
human error of leaving out a part may occur under very rigid
and costly inspection methods . But a material defect to
the manufacturer is a physical imperfection in some material
component. This kind of defect should in most cases be
easy to recognize.
Meaning to buyer. The purchase of a machine tool
usually represents to the buyer a large capital investment
and as a result, he is inclined to feel that the manufac turer should satisfy the buyer's particular standard for
quality. Therefore, a defect in material refers to anything
in the material that falls short of the buyer' s standard.
The buyer not only wants every material component to be
present, but he also wants the component made of the proper
material in terms that it will do its work and last as long
as the buyer has need for the machine tool . If any part is
missing, the buyer usually demands immedi ate replacement.
If, on the other hand , a component part is sound and it
functions properly but wears out in what may seem to be a
short period of time and operation, the buyer feels that
21
the manufacturer made that p rticular part of the wro g
kind of materi 1, or th the processed the correct material
in such a way that it did not wear as long as would be
expected, and he looks for remedial action in the form of
a replacement or re pairs. It appears that the buyer's
standard for material is not only free of defects, but it
is such that the machine tool will operate during the
period of the buyer's need without malfunctioning or
wearing out.
Irreconcilable positions. It is evident that the
views of the manufacturer and the buyer are quite diver
gent as to defects in the material of machine tools. 1Jhile
many buyers appreciate that manufacturers cannot achieve
the kind of standa r d they desire , it is in their best
interests to work toward the ac complishmen t of such a
standard. In many cases, buyers do accept the manufac turers' position as to defective material. In other
situations, reasonableness compels such buyers to effect
a compromise, usually by negotiation . The net effect of
such demands on the part of t he buyer is a general upgrad ing of material on the part of the manufacturer in an
effort to minimize m terial defects .
III . DE ECT IN . 0 N HIP
Terminology. Jorkmanship refers to the quality
imparted to the machine tool during the process of con
struction. It is a reflection of the art or skill of the
workmen and in turn, of the manufacturer .
22
Manufacturing background. The manufacturer of
machine tools establishes in his plant a certain standard
of quality depending upon the kind of machine tool being
produced, the work that it is expected to perform, and the
demands of potential customers. This standard of quality
is achieved through the efforts of the manufacturer in
terms of adequate m eans of manufacture, the caliber of the
work force, and efficient inspection procedures. The
manufacturer generally assume s that if his designs are
correct, and if his employees follow these designs within
required tolerances, then the proper standard of quality
should be achieved.
Problems in assembly,
1
/hen the various components
of a machine tool are a ssembled a t the manufacturer ' s
factory, there are often pl aces where it is not just a
matter of attachment to the major structure or frame, but
also involves a special a justment. This is true in si t ua tions where there are moving surfaces with gibs , or spin dle s , or power- operate tables , or feeding me chanisms .
23
The adjustment involved is often impossible to make per f ectly at the factory and often can be achieved only after
the machine tool ha been in actu 1 operation for a
. .
rn1n1mu
period . The m anufacturer
•
t obligation to recognize s e
these a ·us t m en
.
lly nxi ou t o ne ce s r s n lS usu c om-
plete t he expedi t iou~ l y ible
.
order to ulli s po s in
ny b yer diss tisfa ct i on T i t the ma chine to ol that has
e
y
been purchas ed . I m os t ca se s , the m anuf cturer or his
re presentative, upon notif · cati on , appear at the buyer ' s
plant and make the necess ary ad justments . ~ith few excep tions , the buyer is not qualified to make these adjustments
and , hence , must lean upon the manufacturer ' s past
experience to make the machine tool provide the best
possible performance .
Subcontractor ' s error. Som etimes the manufacturer
procure s a hole subas sem l y f om a sub ontr ctor . Thi s
su a s sem bly is usu lly added t o t he m nuf act r er ' s basic
ma c i ne Ji t out muc mor e tan a cursory i spection due to
the hi h co t of maki n t ho ou h i nspection and because
it is expected ta t t he subcontractor has produce d a satis factory ite ba sed upon prelim i nary i nvesti ation and past
experience. I t he buyer discovers a efect i n the sub -
ssembly, t he m n f acturer ma ke t he neces a r y correction
or or r t e 1 C e t S 001 s pr ctic ble .
24
eaning tom nufacturer. When the manufacturer
offers a warranty against defective workmanship, he has in
mind any error that may have been committed in the factory
during the construction of them chine tool th t results in
a lower quality stand rd than was origin lly planned and
set into operation. For the most part , the manufacturer
holds the position that poor workmanship re ches the buyer
only through s ome failure of the inspection process.
eaning to buyer. The buyer takes the same position
in workmanship as in material . i\fhat l:1e wants is not only
"first-class" workmanship , but also a machine tool so
constructed that it will function in accordance with his
particular performance requirements . In many case s , it is
possible for the buyer to determine prior to purchase whe
ther or not the workmanship in a certain machine tool will
produce the kind of tolerance or finish necessary for a
particular job. vhere the buyer is unable to determine the
standard of workmanship beforehand, either through his own
ignorance or lack of experience, the opportunity arises for
a claim that there is a efect in such a category .
Work anship versus material . It is apparent that
the views of the manufacturer nd the buyer iffer a s uch
on workmanship as on material . It shoul e pointed o t
that an error in orkmanship often shows up as defective
material . When the thre s are stripped on a sere , the
25
defective screw is evi ence of a defect in material , whereas
it actually may be the result of poor workmanship . There
fore, it i s often difficult to decide whe ther workmanship
or material is responsible for a discovered defect. It is
of greater importance to the manufacturer than t o the buyer
that the cause of the defect be ascertained in order that
remedial action may be t aken and the caus e corrected in the
manufacture of subsequent units of the same machine tool .
IV. DEFECT ' IN DESIGN
M anufacturer's position . ome of the machine tools
of a manufacturer' s line are usually called "standar d " and
have in most ca ses been produced for a considerable period
of time . The design of such a machine tool has usually
been improved based upon the experience of users. O n spe cial or new machine tools , the manufacturer normally make s
a considerable effort to che ck the design carefully so that
it takes advantage of all available knowledge on that
particul ar operation . In most of these cases , the manufac turer r arely proceeds with construction ntil the design
has satisfied the tests he feels necessary for engineering
soundness , practical appli cation , and excellent performance.
Buyer' s position . The fact that the manufacturer
warrants the achine tool to be free of defects in design
often m eans little to the buyer . The buyer tends to feel
26
that the defects in workmanship and material speak for
themselves and thus often, he fails to consider the matter
of design. This is especially true during the first months
of operation of the machine tool. It is l ater on, and
often after the warranty period has expired, that the buyer
sometimes comes to the realization that the defects in
workmanship or material which may have appeared will con
tinue during the whole life of the machine tool due to
some defect in the original design of the machine tool.
In such a situation, the buyer realizes that it will be
necessary to continue to replace certain parts because
the fundamental design of the machine tool prevents any
other action except replacement or repa i r.
Problem in design. Defects in design are often
difficult to discern, especially in a new machine tool.
While the discovery of such defects is of great importance
to both the manufacturer and buyer, it is the buyer only
who has the real opportunity to observe the machine tool in
action and to uncover the design deficiencies. The buyer,
in many cases, is not prone to look for troubles resulting
from error in design; the primary concern is with material
and workmanship defects. ince the defect in design is
often not discovered until after the expiration of the
warranty period, the manufacturer does not glean the full
benefit of the buyer's experience. Most manufacturers are
aware of this problem ad make a considerable ef ort,
especially through their representatives , to learn from
the buyer if improvement is needed in any of the features
of the design of the machine tool .
V. COM PON EN T FA CTURED BY UPPLIER
27
Limiting responsibility. Most machine tool manufac turers find it necessary to purchase certain components for
incorporation in the machine tool, such as electricals,
ball bearings and gearing . Components that are manufactured
by various suppliers are usually warranted by the manufac
turer on the basis that the same warranty, given by the
supplier to the machine tool manufacturer, is passed on to
the buyer . For example, machine tools are powered by
electric motors and practically all of these motors are
purchased by the machine tool builder or manufacturer from
an electric motor manufacturer. The motor is usually
warranted by the motor manufacturer for a definite period
of time, which may or may not be the same period of time
that the machine tool manufacturer warrants the machine
tool . M achine tool manufacturers have generally adopted
the policy of extending their rights under any warranties
granted by the suppliers of components to the buyer of the
machine tool.
28
Basis for position. It is easy to understand that
one manufacturer would find it difficult to warrant the
product of another manufacturer. The machine tool manufac
turer may be able to specify the requirements for a motor
to power the machine tool in terms of horsepower, revolu
tions per minute, temperature rise and type of enclosure,
but the design and material and workmanship that go into
the construction of such a motor are matters that primarily
concern the motor manufacturer. From the standpoint of
practicality, it is impossible to hold the machine tool
manufacturer responsible for a component that is produced
under the complete control of another manufacturer.
Practical solution. Because the machine tool
manufacturer buys motors in large quantities, it is to the
motor manufacturer's advantage to undertake to honor the
service obligations of the express warranty after the motor
has been sold to the machine tool buyer. In most cases,
the motor manufacturers maintain service organizations that
are national in scope . hen the machine tool buyer dis
covers a defect in the motor , the local service office of
the motor manufacturer is contacted for correction of the
defect. ny question as to the warranty period can be
answered by checking the motor serial number with the
factory where the motor was made . This analogous situation
applies to practically all of the other components that are
part of the machine tool but are not nuf ctured by the
machine tool builder . T es me a n em ent i m int ined
in those ca es where such items s electricals are speci fied as to manufacturer by the machine tool buyer .
VI . TENT IN RI GE EN T
2
Buyer ' s protection . lthough found in very few
warranty provisions , nother object to be warranted by the
manufacturer of machine tools is patent protection , that
is , protection for the buyer from any claim based upon the
infringement of a p tent . The b sis or sue w rr nty
is that t e ma uf cturer , providing them chine tool is
built to the manufactur r ' s desi n , should ssume the
respon ibility for clear nee of such design for patent
infringement . Ins ch cases , it is felt that the infringe
ment of a patent should result in a claim against the
manufacturer and not agains t the buyer .
Usual conditions on buyer . Nherever a patent indem nification clause appears, it is sually the case that the
manufacturer dem nds that the buyer comply with two condi tions . These are (1 ) that the buyer should promptly notify
the manu act rer of ny clai o pate t infringement , nd
(2) th t the bu er hold ive t em n cturer co lete
uthorit to dee d t em ·ne to 1 co . p n ' s o~ition .
30
Possible solutions. In the event that the machine
tool should be found to have infringed on an existing
patent, the manufacturer usually reserves the option to
take one of the following courses, namely , to (1) purchase
from the patent holder the ri ght to continued use of the
machine tool, (2) replace the machine tool with one that
will not infringe on the patent , (3) modify the machine
tool so that it will not infringe, or (4) remove the machine
tool and refund the purchase price to the buyer . In the
implementation of these options, the point to be considered
is that the infringing feature that must be eliminated may
be the one that influenced that buyer to purchase the
machine tool. The fe a t ure involved may have made possible
the required production rate, or finish, or tolerance. In
such a case, the buyer will be adversely affected by the
removal of the feature so as to reduce the production rate
or the ability to produce a certain finish or tolerance.
It is to be concluded that in the situation where there is
patent infringement , the only satisfactory solution for the
buyer is a remodele d or r eplaced ma chine tool t ha t provides
as much or more in respect to production, finis h , or
tolerance as the original m achine t ool . A ny solution of
the patent infringement problem tha t f all s short of pr ovid ing equal or better than ori inal performance , may be
considered a loss fo r the buyer for which he should not
be held re sponsible .
31
VII. PE C
O bject of both parties. !hen the buyer purchases a
new machine tool , he usually feels th the has procured a
more efficient piece of productio eq1i ent tha either
hi existing equipment, other m chine tools, or some other
achininb m ethod . T is thinkin reflects the buyer's con cern ith the production rate and the constant effort to
increase unit production . On the other h nd , when the
manufacturer sells a new machine tool , he usua~~y thinks
in terms of its ability to outperform a piece of competit~e
machinery . The sale is usually made on the basis that this
ma chine tool will produce a certain number of pieces pe r
hour more than the buyer ' s ex ·sting eq ipment or the ma chine
tool made by another anufacturer .
Performance problems . O f the 142 manuf cturers of
machine tools in the survey , only f our saw fit to mention
performance i their
I
rranty clause or adj cent to it in
their standard ter sand con itions .
1
•hy do warr nty
clauses in gene r 1 avoid the atter of perfor m nee. ~hy
i s performance ignored hen it ppears to be foremost in
the minds of both the buyer nd the seller hen the nego tiations for the sale nd purchase are in pro ress .
voidance of warranty for performance is due to the
m tter of the vari bles involved in the o eration of the
plants of the various buyer . Oper tors differ in age,
32
eyesight, hearing, agility, dexterity, tr ining nd atti tude. upervision varie s in the number of machines to be
watched , in training, in interest and in the effect that
production might have on wage s . Owner s stand apart on
their policies of machine replacem ent, maintenance, shop
cleanliness and depreciation. aterials run the gamut fr om
the softest copper to the hardest of steels and titanium .
s a result of this multiplicity of variables, the warranty
for the performance of a machine tool would be so condi
tional that it ould probably be rendere d ineffectual. In
the few warranty clauses covering performance , the manufac turer usually points out tha t the figures for production
are only estimates, tha t they are bas e on the manufac
turer's understanding of the buyer's requirement s as t o
finish and tolerance, the kind of material to be used, the
amount of stock to be rem oved and the material handling
facilities t o be provided . Only in those cases when the
machine tool will be used indefinitely on the same work,
using t he same material , ith the same requirements as t o
t olerance, fini hand number of arts to be produced , can
it be possible at this time to achieve a performance
war ranty . It i evi ent that i such cas e s , the perfor mance warranty would be applicable only to that part i cular
job . In view of the foregoing , it appears that the warranty
for performance pre sents a re 1 challenge t o both the manu-
f acturer and the bu er th th s yet not been resolved.
VIII. u YON OBJECT EXP LY R TED
The object s warranted .
1
/hereas some manufacturers
mention design, construction and parts in t heir warranty
clauses , it seems that m ost of the manufacturers consider
material and wor kmanship to be the objects expressly
warranted.
33
Intent of parties. By expressly warranting against
defects in the material and workmanship of the machine
tool, the manufacturer proposes to offer a machine tool
that is complete and free of defects within the human
limits of following a proven design . The buyer of the
machine tool is pr one to want one that is not only complete
and without defect s according to the manufacturer's design ,
but also one that goes beyond such tangibles into the r ealm
of being and doing what the buyer would like to hav e r ather
than what the manufacturer has built . ince machine tool
manufacturers and buyer s seem to hold varying viewpoints as
to the matter s of material and workmanship, it is importan t
that a common understanding should be reached before the
contract is made .
The missing warranty . In spite of the fact that
performance is actually of primary concern to most buyer s ,
this matter has failed to achieve much consideration in
34
the writing of express warranty provisions due to the
number of variables involved. The object of performance
should command greater consideration in the preparation of
expres s warranties for machine tools, especially in the
field of special pur pos e equip ent or i n tho se cases where
the machine tool will be used indefinitely for a specific
job.
C PTE III
THE EXPR 1 f RRANTY PERIOD
Next to the objects warranted, it is of interest to
know the starting date and the length of the express war ranty period. This is another of the sections to be
considered in the analysis of the express warranty
• •
provision.
The purpose of this chapter is to (1 ) examine the
results of the survey in regard to the express warranty
period; (2) present the advantages and disadvantages of
several possible starting dates to both the buyer and the
manufacturer; and (3) consider the aim of the warranty
period in the light of the time available for the accom plishment of such a purpose.
mong machine tool manufacturers, there seems to be
general agreement that the buyer must file his claim for
defects within a certain period of time. However, manufac~
turers do not agree as to when the period should begin or
for how long it should be in effect. ince in most cases
the benefits under the express warranty provision can no
longer be enjoyed after the stipulated period has expired ,
the matters of the length and the starting date of the
express warranty period are of great importance to both
the manufacturer and the buyer.
36
I . TA TING DTE O PE I D
Results of survey. hereas there was general agree -
ment as to the objects to be expressly warranted , such is
not the case as to the date when the express warranty
period is to be gin. Table IV shows a breakdown of t he
dates when the manufacturers of machine tools in the survey
start their warranty periods.
TAB I V
TARTIN G DATE OF W AR NTY PERI OD
142 ANUF CTURE OF l CHIN E TOOL
Starting Date of
tJarranty Period
N o . of
1frs .
hipment from Manufacturer ' s Plant .•.
Delivery at Buyer's Pl ant .•......
Consummation of Contract ...•....
Installatio at Buyer' s Pl ant ..... .
Commercial Operation at Buyer' s Plant •.
Issuance of Invoice ..•........
Not pecified. .
• • • • • • • • • • • •
87 .
24 .
6 .
3 .
2 •
2 •
18 .
Percentage
. . 61 . 3
. . 16 . 9
. . 4 . 2
• • 2 • .L
. . 1 . 4
. . 1 . 4
• •
12. 7
TOTAL .....
• • • • • • • • • • • •
. 142
• •
. 100 . 0
Table IV shows that about three-fifths of the machine tool
manufacturer s in the survey adhere t o a policy tha t causes
the warrant y peri od to begin on the date that the machine
tool is shippe from the manufacturer' s factory . The next
l a r gest group , consisting of about 17 per cent of the
manufa cturers in t he survey, eli eve tha t t e warranty
period should not begin un il the a chine ool has ee
37
delivered at the buyer's plant. Of further interest is the
fact that 12 per cent of the manufacturers in the survey
did not deem it necessary to establish a starting date for
the warranty period.
Date of shipment. The date that the machine tool is
shipped from the manufacturer's plant is an easy date to
establish. Shipping M emoranda, bills of lading, shipping
receipts and other business do cuments clearly define the
date of shipment. Because such papers are usually of easy
access, manufacturers have tended to start the warranty
period from the date that the machine tool is shipped from
the manufacturer' s plant . Granting that the use of the
shipping date makes for the matter of a record that is
readily obtainable, such an arrangement is disadvantageous
to the buyer because the time that the machine tool is i n
transit ust be deducted from t he express warranty period .
If the manufacturer were in assachusetts and the buyer in
California, a t hirty-day warranty would be halved by the
time require d for shipment across the United tates. It is
also possible for the regular transit time to be increase d
by floods, snow storms , and other events and conditions
beyond the control of either the manufacturer or the buyer .
W hatever the extent of the transit time , it is evident that
the mac ine ool i s not available to the buyer as of the
tim e hat it is shipped from the manufacturer ' s plant .
38
The transit time, however long or short, is lost to the
buyer forever under such an arrangement. The period of the
express warranty, whatever its length, is shortened by the
time required for transit and is actually less than the
time period that appears to be offered to the buyer by the
manufacturer.
Date of receiving. bout 17 per cent of the machine
tool manufacturers in the survey start their express war ranty period from the date that the equipment is received
at the buyer's plant. rom the manufacturer 's viewpoint,
the date of receiving can be easily ascertained in most
cases by means of Receiving Reports and other shipping
records. Furthermore, the buyer is in actual possession of
the machine tool as soon as it is laii on his receiving dock .
Therefore, on the basis of the accessibility of the date
and actual possession of the machine tool purchased , it
might be concluded that it is more equitable for the war ranty period to begin with the date of receipt at the
buyer's plant . Such a conclusion is based on the assumption
that the buyer will be able to place the new machine tool
in operation almost immediately after it has been received .
There are some very goo
is not always possible .
reasons why such a course of action
new building may not be com-
pleted, or the necessary pit or foundation may need curing,
or the plant or pro uction line layout may not have been
39
finalized, or the machine tool may have been damaged in
transit and require repairs. lhile it is true that t hese
are buyer problems over which the manufacturer does not
share any control, they are, nevertheless , real business
problems that buyers must experience when the situation
arises . The manufacturer can discl aim any respo ibility
for t hese proble ms but the buyer i~ of the position that a
valid contingency has prevente d the testing of the ma chine
to determine if it will perform in ac cordance with specifi
cations and is free of defects in material and workmanshi p .
Therefore, while fixing the starting date of the express
warranty period from the date of recei pt at the buyer 's
plant is much more acceptable to the buyer than from the
date of shipment from the manufacturer's pl ant, neither of
these arrangements is wha t the buyer actually seeks when
the purchase i s made.
Completion of installation. fter a eneral inspec
tion to determine that all kno~n co ponent s are present and
appear to be without defects , it is to be as sumed that the
buyer after receiving the machine tool will immediately
undertake its installation . There may be some very good
reasons why such an undertaking may be delayed but it is
generally understood by both the manufacturer and the buyer
that t he machine tool will be installed as soon as practi
c ble after it has been received . In establishin the ate
40
for the completion of install tion as the commencing ate
for the express warranty period , records such as tho se that
cover shipment from the manuf cturer's plant and receipt at
the buyer's plant , a re not available. The manufacturer
might fe a r that the buyer would attempt to extend the war
ranty perio by installation and operation of the machine
tool without est blishing a date for the completion of
installation. In order for the anufacturer to insure th t
such an event did not t ke pl ce, it wo11l d be necess ry for
the m nufacturer or is represent tive to police the buyer 's
plant and observe the actua l d te for the completion of
installation. Since such a proce dure N OUld probably be
impractical, the establishment of the date for com let · on
of installation may be best resolve d by agreement between
the m anufacturer and the buye r s to the number of working
days tha t might rea son bly be required t o inst 11 t he
machine tool after receipt at the buyer' s pl ant . By such
an agreement , the da te for completion of i nstallation woul d
be a certain number of days after the date when them chine
t ool v s rece i ve d t the buye r ' s 1 nt nd as such , ould
e b sed n v il ble recor s .
e chine tool , hen ~hipped from the man f c turer ' s pl tor w en receive d on the uyer' s receiving
ock , is inc pable of performin ny work . ntil it ha
been set pon the correct foundation , pr operly leveled and
connecte to power , the achine tool i useless . , .✓hat t e
41
buyer had in mind when the purchase wa made w snot an
ass embly of iron and steel , but an activ te d machine tool ,
capable of receiving workpieces and performing operations
on these workpieces . The assembly of iron and steel becomes
useful only when connected to power . Consequently , the
date for completion of installation is more desirable to tre
buye r as the starting date for the express warranty period
than either the date of shipment from the manufacturer's
plant or the receiving date at the buyer ' s pl ant , because
from that date forward , the machine tool can be tested
for defects in workmanship and material under power .
Initial operation. fter the installation has been
completed , the machine tool is initially operated for a
trial run . Here the buyer sees for the first time the
performance of the machine tool that he probably purchased
several months before . .• hile the buyer had seen photographs
of the machine tool in the manufacturer ' s plant , or opera tion of the same model in another plant, the trial run in
the buyer ' s pl ant represents to the buyer what has actually
been purchased .
The date for completion of installation nd the
date of initial operation may not be the same d te. It
m y e neces a r to trai an operator to run the machi e
to ol . I ay be necessary to install terial h ndlin
equipment . There may be lubric nt~, coolants or material
42
to secure . From the buyer ' s standpoint , the date of initial
operation is mo re acceptable as the s t arting date for the
express warranty period than the date for completion of
installation.
1
en the machine tool is actually doing
work , and not just connected t o power , it is giving evidence
that the workmanship and material are sound . The diffi culty of establishing the date of initial operation can be
resolved by agreement between the buyer and the manuf ac turer
as to the number of days required after completion of the
installation f or preparation for initial operation. The
starting date for the expre ss warranty period would be
arrived at by adding the number of days agreed upon for
completion of install ation and for preparation for initial
operation, to the date that the ma chine tool was receive d
a t the buyer ' s plant .
First production r un . fter the initial aper tion
of the machine tool , there are usually certain adjustments
to be m de . Controls that re tight or stiff may have to
be set free . Electrical connections may have loosened in
transit nd r equire tightening . Gibs may have to be
adjusted . 1aterial handling equipment , lthough installed
for the initial operation , may now have to be changed to do
a more effi c i ent job . 11 such adjus tments are deemed to
be necessary as a re~ult of observing the initial operation
and are perfor ed prior to the fi r st production ru . hile
43
the buyer may have observed the performance of the machine
tool that he probably purchased several months before
during its initial operation, it is only after certain
adjustments have been made leading up t o the da te of the
first production run tha t the buyer can see the m chine
tool producing part s , with r equired t olerance and finis h ,
under production conditions.
The date of initial operation and the date of the
first production run would probably not be the same . Again
the difficulty of establishing the date of the first pro duction run can be resolved by agreement between the buyer
and the manufacturer as to the number of days required
after the initial operation for preparation for the first
production r un . The starting date for t he express w arranty
period would be arrived a t by adding the number of days
agreed upon for completion of i nstallation , for pre par ation
for i niti 1 operation and f or pr ep rati on fo r t he f ir s t
production r un , t o the da t e tha t t he machi ne t ool was
receive d at t he buyer ' s plant .
The best s t arting date.
1
.:.Jha t i s t he best date for
starting the expre ss warranty period . The best date for
the warranty period to start is (1) t he date that is fair
and just to both the buyer and the manufacturer; (2) the
date that is practical i nsofa r a s establishment is concerned;
and (3) the date tha t satisfie s t he fun amental requireme t
of starting the warranty period when it is possible to
achieve the purpose of such a period , namely to test the
soundness of the workmanship and material of the machine
tool.
From the manufacturer' s position , it is submitted
that it is not fair or just to permit the buyer to elay
the start of the warranty period indefinitely. uch an
extension of the warranty period not only prolongs the
manufacturer's obligations but also may cause unnecessary
hardship on the manufacturer and his service facilities.
44
It would seem fair and just for the manufacturer to expect
the buyer to install and try out the new machine tool as
expeditiously as possible on the premise that the machine
tool was purchased to perform certain work not in the
future, but as soon as the machine tool could be delivered .
From the buyer ' s viewpoint , it is submitted that it
is not fair or just for the starting date of the warranty
period to be when t he machine tool is shipped from the
manufacturer's plant and is in transit for several weeks,
or when the mach ·ne siting n the
•
uye ·
• •
receivmg
dock and is incapable of being operated , or when the manu
facturer and the buyer consumm ate a contract which might be
several m onths prior to shipment of the machine tool from
the manufacturer's plant , or when the machine tool is
installed at the buyer ' s plant an has not be en initially
operated or has not made a production run, or when the
manufacturer may choose to send an invoice to the buyer .
It is submitted to be just and fair to both the
buyer and the manufacturer to have the startin date of
t he express warranty period established as the first day
45
of commercial operation at the buyer ' s plant . O f the 142
manufacturers of machine tools in the survey , only two or
1.4 per cent had adopted such a policy . Commercial opera tions m eans that the machine tool is engaged in doing work
in an effort to make a profit for the buyer . That is the
underlying reason for the buyer to purchase the new machine
t ool and it is only after the machine tool has been shipped,
r ece i ve d , installed, initially operated and functioning as
a piece of production equi pment that the buyer has actually
secured the object of his purchase contract .
The establishment of the number of days required for
shipment from the manufacturer's plant to the buyer ' s plant
f or installation , for initial operation and production run
preparation, could open another area of negotiations that
might complicate the sale of a machine tool . It is proba
ble that some manufacturers who feel that ix months is a
sufficient period of time to iscover defects in workman-
ship and material , y have allowed another six months for
time in transit, installation, and preparation for initial
operati o and the production run, thereby arriving at an
46
express warranty period of on year starting with the date
of shipment from the manufacturer's plant.
II. LENGTH OF PERIOD
Importance of period. Both the manufacturer and the
buyer have a considerable interest in the length of the
express warranty period. The manufacturer must plan to
provide repla cements or repair facilities for defective
material and to make corrections for defective workmanship .
During the warranty period , his service facilities m ust be
organized to receive, inspect and ship the parts involved
in any defect. ~uch service facilities entail additional
operatin expenses that must be planned for and provided .
The buyer of the machine tool is interested in the
length of the express warranty period because he must dis
cover any defect in workmanship and material during the
specified period of time . The manufacturer usually has
obligate d his company to make repairs or to provide replace
ment part s only during the warranty period nd the buyer
must either bring such defects to light within this period
or correct the defects at his own expense . If the buyer
should fail to install the machine tool or to prepare it
for initial operation or the production run for a consider
able period of time , t e l ength of the express warranty
period may be so shortened that it will be ineffectual.
Results of survey. ~os t of the machine tool
manufacturers offer expres s warranty periods ranging from
one to twelve months . Table V shows a breakdown of the
various lengths of the express warranty period nd the
number of manufacturer s who offer such a period .
TABLE V
ENGTH OF v .f
142 ANUFACTU ER
' NTY PERIO
CHINE TOO - ~
Length of N o . of
· arranty Period M frs . Percentage
1 1 on th. . . . . . .
3 r on ths . . . . . .
6 M onths ..... .
12 M onths .....•
Not specified
TOTAL • • • •
• •
• •
• •
• •
• • • • • • •
• • • • • • •
• • • • • • •
• • • • • • •
• • • • • • •
2 . . . 1 . 4
8 . . . 5. 6
51 . . . 3 5. 9
76 . . . 53 . 5
5 .
• •
• • • • • •
. 142 .
• •
3.6
100 . 0
-
Table Vindicates that about half of the manufacturers of
the survey limit their warranty period to one year and that
about one-third offer a warranty period of six months'
duration.
Discovery of defects . 1
1
Jhat is the test of the
length of the warranty period. The length of the express
warranty period may be judged on the basis of whether it
is long enough for defect s to be discovered . Te amount
of tim e necessary to discover defects in orkmanship and
material is a matter of which there is often a wide differ ence of opinion . ,!here the machine tool is a model that
48
has been pro uced with little basic ch n e for many years,
the manufacturer feels that company records offer the best
guide as to how long the arranty perio should l as t . Each
buyer, on his part, f eel s tha t the particular circumst nces
of his plant and pr oduct demand individual attention as to
the length of the warranty period . The limiting of the
warranty period on the basis of a definite period in time
rather than on the basis of how much time might be required
to discover defects , seems to avoid the actual purpose of
the warranty period . The reason for the arbitrary limita
tion on the period probably reflects the carelessness and
abuse on the part of some buyers in the past . The result
has been that manufacturers have placed a definite limit
on t he erpress warranty period in order to (1) encourag e
buyers to i nstall and try out the machine tool as soon as
practicable, and (2) relieve themselves of the obligation
of repairing or replacing defective parts at a fixed date
after the machine tool has been shipped from the
manufacturer ' s plant .
III. Y O E P l RANTY E I OD
Purpose of period . In the sale of machine tools,
the manufacturer s offer roduct th tis the best that can
be produced by the manuf acturing techni ues of their p rti cular pl ants, all within t he st ndards established for
t eir p rticul r pro ucts . ome pr oduct s , however, reach
49
the buyer with defects in wo rkmanship and aterial and the
manufacturer obli ates himself through the express warranty
provision to repair or replace such defects as may be dis covered during a stipulated period of time. The problem
here is not the purpose of the express warranty period , but
rather to fix the starting date and the duration of the
warranty .
I mportance of s t arting date. The manuf acturer's
obligation to correct defects in wor kmanship and material
carries with it a definite cost that involves planning and
budgeting . From past experience, the cost of service can
be estimated in relation to the level of sales. To main
tain a service organization that wa s created to take care
of a high sales volume during a period of relatively poor
sales, might result in a burden that the manufacturer
could not survive.
s for the buyer , he must discover any defect i n
workmanship and materia l and file his claim within the
warranty period. iith only a limited period available ,
t he buyer knows that he mus t install and operate the machine
in the shortest period of time after it is received a t t he
buyer's pl ant . However, the buyer cannot t ake advant age
of the full warranty peri od if t he starting date is the
date of shipment from them nufacturer ' s plant and as a
result , the tim e involved for tran it , for installation ,
50
fo r pre pa a t ion for i i tia oper tion an forte production
run , is lo t fore er . It oul d seem th t t e b1tyer co l d
not expe da y ef ort to disc over def ect s if t he ma chi ne
tool were not i n hi s possession nd ready for prod ction
operation .
Correlation aspec t . By reviewing Tables I V and V,
it might be concluded tha t more than half of the m achine
tool manufacturer s of the survey off er a wa r ranty peri od
tha t starts with the da t e of shipm ent f rom the manufa c turer ' s l ant and r un s for one year t hereafter . Table VI
shows th t the manufacture r s who s t art their warranty
period on the d te of shi pment do not all h ve aw rrant
period t welv e m onths in length ; conversely , those m nufac t ure r s w ho arrant t heir machine tools for t w elve months ,
do not all s t r t t he 1ar ranty period with the date of
shipm ent from the m nufac urer ' s pl ant .
T
BI 1
I
C I
TI T G
D T
T N'TY ER OD
142 F MAC HI NE TOO
tarting Date of
•
Length of rranty Fe.ticd
•
• •
larranty Period
•
N o. of 1'-1 ont : N ot ;::,pe-
•
•
:Total
•
1 .
3 .
6 .12 : cifie d
• •
• • •
hipment from anuf acturer's t :
•
4 :34 :49
• •
87
• • •
Delivery a t Buyer's plant
• •
2 :13
•
9
• •
24
• • • • •
Consummation of C ontract
• • • •
6
• •
6
• • • • • •
Installati on a t Buye r ' s l ant
• •
1 :
•
2
• •
3 • • • • •
Comm ercial Opera t ion a t
• • • • • •
• • • • • •
Buyer ' s l an
• • •
1
•
1
• •
2
• • • • • •
I ssu nee of Invoice
• • • •
2
• •
2
• • • • • •
ot ' 2ecified
•
2 : 1 :
3
•
2
•
2
•
18
• • • •
TOT
•
2 :
8 : 21 :z6
•
2
:142
• •
51
Table VI reveals that while 87 manufacturer s out of the 142
in the survey feel that t he expre ss warranty period should
begin with the ate of shipment from the manufacturer ' s
plant, only 49, or . 56 per cent of the group of 87 also
feel that the warranty period should last for twelve months.
If it were assumed that the warranty period should begin
with the date of shipment from t he m anufacturer's pl ant ,
and that the period shoul d run f or twelve months , then only
49 out of 142 , or .34 per cent , fall in such a ca t egory .
To consider t he m atter from the viewpoint of the length of
the w arranty period nd assum e t ha t the warranty period
should r un for one ye ar and should be gi n with the date of
commercial operation at the buyer 's pl ant , only one out of
142 , or . 007 per cent , f all in such a cate gory. Conse quently, the de gree of correlation betwe en manufa cturer s '
policie s as to the starting date and the length of the
warranty period is actually smaller than m i ght appear from
reviewing Tables IV and V only . Table IV shows tha t 87 out
of 142 manufacturer s i n t he survey start their warranty
period ith the date of shi men t fr om t he manuf acturer ' s
plant . Table V shows that 76 out of 142 manuf acturers in
the survey offer a warranty peri od tha t is twelve months in
length . But i n Table VI, the number of manufacturers w ho
offer a warranty period twelve months in length and one
that s t arts with the date of shipment from themanufacturer's
plant is a ctually 49 out of 142, or .34 per cent. This
52
constitutes the highest percenta ge of correlation between
starting date and length of arranty period amon the 142
manufacturer in the survey . The second highest correla tion percent ge is . 24 which represents the 34 m n facturers
of the survey who offer a warranty period that starts with
the date of shipment from the manufacture r ' s plant and runs
for six months . The third highest correlation percentage
is . 09 which represents the 13 manufacturers of the survey
who offer a warranty period that starts with the date of
delivery at the buyer's plant and runs for six months.
Beyond these three combinations , the balance of the manu
facturers offer warranties whose policies as to starting
date and length result in insignificant correlation
percentages.
Conclusion on period. In view of t his examinat i on
of the result s of the survey, i t may be concluded tha t
there is no beneral agreemen t between the machine tool
man f acture r of the s rvey a s to t he s t arting date and
length of the warranty period . Furthermore, because of
the wide range of starting date s and lengths of the various
warranty periods , it follows that some manufacturer s mus t
offer warranty peri ods with starting dates an lengths that
appear to hold disa van t ages for the buyer. The test for
this disadvant a e to the b yer is when the pur pose of t he
53
warranty period, which is to discover defects in workman
ship and material, is nullified due to the fact that there
is not sufficient time for the accomplishment of such a
purpose .
C TER IV
TY CO ITI P1 H IB TIOJ
In order to provide themselve s with protection from
certain unfavorable situ tions nd possible ddition 1
expenses, some manufacturers have i nserted in their express
warranty provisions specific conditions and prohibitions
that serve to control the manufacturer's obligation and
limit the buyer's rights.
The purpose of this chapter is to (1) examine the
results of the survey in regar d to expres s warranty condi tions and prohibitions; (2 ) present the advant ages and
disadvantages of these conditions and prohibitions to bo t h
the buyer and the manufacturer; and (3) consider the
practical application of such conditions and prohibitions
as they become involved in the purchase and use of machine
tools.
It would appear that these conditions and prohibi
tions are a reflection of the experience that has been
gained by machine tool manufacturers over a considerable
period of time. Certain acts by buyers that in the past
have resulted in additional expenses to the manufacturer
are now expressly prohibited. lthough not of as great
importance as the objects warranted or the length and
starting date of the warranty period , the conditions and
prohibitions m ke up two ore sections to be considered
in the analysis of the express warranty provision .
I .
p
l R NTY CONDITIO
Results of survey. Table VII shows the number of
machine tool manufacturers in the survey who have incor porated specific conditions in their standard express
warranty clauses.
T LE VII
EXPRE
1
RRA TY C ONDITIO
142 NUFACTURER OF C HI NE TOOL
No. of
55
Conditions of
Express W arranty Mfrs . ercentage
Normal and proper usage ..•..•..
Owned by original buyer .•......
Pr ompt Notification of Defect .....
Used on an Eight- Hour hift ....•.
None specified •...
• • • • • • • • •
72
•
55 •
16
•
4
•
56
•
• •
51 .7
•
•
38 . 7
• •
11 . 2
• •
2. 8
• •
39 .4
Table VII shows that more than half of the machine tool
manufacturers in the survey include a condition in their
express warranty provision relative to normal and proper
usage . It is also to be noted that almost 40 per cent of
the 142 manufacturers do not include any conditions in
their arranty clauses .
Normal usage . The manufacturer, y inserting he
condition tat the machine tool ust have been su ject to
normal and proper usa e, is thereb tr in to protect
56
himself from the buyer who purchases under-capacity machine
tools or from the buyer who uses the machine tool beyond
the point of reasonable operation and contrary to good shop
practice . N hether the buyer is attempting to minimize the
capital investment or to perform work for which the machine
tool was not designed, failure to use the machine tool in a
proper manner often results in breakdown . The manufacturer
designed the machine tool to do certain operations within
definite limits and overload safety factors. If the buyer
has a need for operation beyond such limits and safety
factors , it is presumed that a machine tool of greater
capacity will be acquired . It is reasonable for the manu facturer to try to make sure that the buyer who forces the
machine tool to perform in a manner for which it was not
designed, does not have the opportunity to exercise his
rights under the provisions of the express warranty clause .
~hether the phrase is normal and proper usage, or
ordinary and normal use and service , or proper and normai
operating conditions, or normal operation and service, or
normal operating conditions , or nor al recommended service
within design limitations, or any other similar combination
of words, it is difficult to define exactly what the manu
facturer has in mind ad how the buyer interprets these
terms. V lhat may be overlo d operation to t he manufacturer
may well be a routine operation to a particular buyer
because of policy of purch si g ere pacity equip et
57
in ore to conserve on capital investment . The ma u ac turer , in borderline situations , is inclined to reco med
the purchase of the next large r model , and the buyer t ends
to purch se the m odel that will ·ust do the j ob.
Even though it might be difficu t to arrive at a
definition for normal and proper usa ge that would be satis f ctory to both the manufacturer and the buyer , it is not
difficult to surmise what the manufacturer has in mind .
The manufacturer is tryin to protect himself from the
buyer who sub ·ects the achine tool to Bbuse , who makes
the machine tool do work beyond its capacity , 1.Arl10 subjects
the machi ne tool to operations beyond the scope of good
shop practice , and then expects t he manufacturer to repair
or replace each an every component that m i ght fail on
the basis of defects in materia l and NOrkmanship . The
express warranty a ainst defective material and workmanship
was never intended to cover situations here there has
been deli erate abuse or unintentional carelessness on
he part of the buyer .
The ·udge of what constit te a co dition outside
of normal and proper usa e is them nufacturer . s a part
oft e proce ure forte correction of defects , the m anu act rer usu lly res rves the ri ht to i spect al com ponent which the uyer claims to e defective in ateri 1
ad o km hip . The efective o ponent is checked care u 1 to e erm i e , on t he b si oft e anuf ctu er ' s p st
58
extensive experience , whether the defect is the result of
some failure in the manufacturing process or is the result
of some abuse or carelessnes s on the part of the buyer .
W hile such an arrangement may not always be satisfactory
to the buyer, the manufacturer must arrive at decisions in
such matters with the thought in mind of how such decisions
might affect future sales. This sales or future sales
consideration has sometimes caused manufacturers to be
liberal in their interpretation of the meaning of normal
and proper usage.
Original ownership. Another of the conditions
imposed by some manufacturers on the buyer is that the
express warranty exists only between the manufacturer and
the original buyer of the machine tool. As a result, the
warranty does not pass with any change in ownership and
consequently ceases to exist when the original buyer sells
the machine tool, even though the period of the express
warranty has not otherwise expired.
From the manufacturer's viewpoint, the imposition
of such a condition avoids t he situation where ownership
might have changed and it would be impossible to fix res
ponsibility in the event that some questions might arise
as to the normal and proper usage of the ma chine tool .
The present owner might claim that the defect resulted
from some action of the original or previous o\filer . In
59
such cases, the manufacturer f ears tha t difficulty in
fixing responsibility would resul t in forcing t he manufac
turer to stand behind any defect in workmanship and material
regardless of whether or not such defects were caused by
abuse or carelessness on the part of one of the owners of
the machine tool.
From the viewpoint of the original buyer , the
manufacturer's condition that the express warranty ceases
in the event of sale could result in a certain disadvantage
if the buyer were forced, for some reasons , to sell the
machine tool shortly after it s delivery. The second buyer
might offer less for the ma chine tool because of the fact
that it no longer carried a warranty against defects i n
material and workmanship .
' here the buyer m i ght express his dissatisfaction
with such a condition, he could point to many products ,
such as electric refrigerators, wherein the warranty follows
the product through successive ownership regardless of num ber , until such time as t he warranty expires . The manufac
turer of machine tools , on his part , would answer that a
ma chine tool is not sub·e c t to the same use as an electric
refrigerator due to the fact that the operator of the
machine tool establishes the workl oad , where a s the electric
refrigera tor f unctions un er a relatively st nda r d 1orklo d
t ro g out its workin lifetime . It is the scope of
operation within the owner ' discretion th t raises oubts
60
in the mind of the machine tool manufacturer in those
situations where it ppears tha t the machine tool ha s been
subjected to trea t m ent beyond nor 1 and proper sage.
e rdless of t he m anufacturer' s concern with t he
prob l em of fixing res ponsibility in the event that some
questions might arise as to the normal and proper usage of
the machine tool that has had more than one owner, the
objects of workmanship and material that are warranted by
the manufacturer to be free of defects remain the same in
spite of changes in ownership. Furthermore , since the
manufacturer is the judge of what constitutes normal and
proper usage, the matter of fixin g r esponsibility as to
which owner wa s involved in w ha t might be considered abnor
mal or i mp r oper usage ceases t o be a pr oblem. On the other
h nd , t he manuf cturer f eel s t h t t he buye r , i n selling t he
machine tool to a second buyer, is interested only in the
sale. The fact that the second buyer may use the machine
tool for work that it was not designed to handle , would
probably re sult in performance dissatisfaction on the part
of the secon buyer. If the warranty period were still in
effect, the sec ond buyer could press hi s cla i m withou t
being limited by the conditions of t he origi nal sale. Thi s
could re sult i n embarra s smen t t o the manuf acturer, unfavor-
ble public i ty and even costly litigation . I n view of the
fore going , them nuf acture r ' s condition of having t he
61
e press warranty cea e in the eve t that t e ori inal buyer
sells the machine tool even though t he perio as not
otherwise expire , m· ght well be sub ·ect to the buyer ' s
further co sideration nd pos~ible opposition .
Notification of efe c t . I some cases , the manufac turer imposes t e condition that the uyer of the ma chine
tool mus t notify the manufacturer promptly of an defect
that m i ght be dis cove r e during thew rra ty period . The
i mportant part of such a condition is that the notification
must be promptly forwarded to the man facturer .
1
The rea son for the manufacturer ' s request for promp t notification
is the knowledge , based on past experience , that many
defect s can be remedied by roper operatin
0
instructions ,
by a sli ht adjustment , or by the for arding of a small ,
replacement part . These instruct i ons , adjus tment s , or
small parts are relatively inexpensive to the manufacture r
when compare to the correction of the damage t ha t might be
caused by continue aper tion of the machine tool without
such in tructions, ad ·ustments , or sm 11 parts . The manu-
f cturer does not nt a minor m alad ·ustment or deficiency
to cause an expensive repair ·ob · s o he insists t e buyer
forw r pro pt notification tha t omethi ng is wrong with
1
ames itterska , Jr., " nticipate or egal
irements , '' ___ _ e _s _t_e _r _n_ Purchas i g gent , 40 :11
, 19 56 ) , p .
62
the machine tool. In ctual practice, it is usually the
case that the manufacturer's represent ative or local service
man can give the roper operating instructions or make the
necessary small adjustment and thereby save the manufacturer
possible large expenses connected with the re pair or
replacement of parts .
t.lhere the manufacturer requests prompt notification ,
there is usually the feeling on the par t of the manufac turer that the buyer may have the tendency to delay the
notification of discovere d defect. The reason for such
a delay is that the buyer has probably purchased the mac e
tool to do a certain job , that he has waited several weeks
or months for the machine tool to be delivered , and th the
is anxious to see the machine tool making a profit on t he
work for which it was purchased . As a result, when the
defect appears to be of no consequence, the buyer's reluc tance to stop the machine while repairs or ad jus tment s are
made might permit him to delay notification to the manufac turer or his representative. In those situations where
the buyer's jud ment is not correct as to what may consti tute defect of no consequence, the failure to make prompt
notification may necessitate a ma ~or correction th t may
i nvolve a much greater loss of tim e for the buyer and much
greater cost to the manufacturer .
63
Eight-hour shift. few manufacturers of machine
tools, in an effort to limit the total numbe r of hours of
usage during a given period of time, sti pul ate that the
machine t ool must not be us ed more than eight hours per
day . For instance , the manufacturer who offers a 1arranty
period of one year but limits operation of the machine tool
to eight hours per d y is p ob bly offering the me war ranty as the manufacturer . hose w rr nty period last for
six months ith operation up to sixteen hours per day .
where the manufacturer wishes to limit the amount of time
tha t the machine tool can be used ea ch day , it may be
presumed that operation in excess of eight hours per day
will put undue strain on t he machine tool or some of its
components and that normal wear and tear may be increased
at too rapid a r ate .
It is apparent that a condition limiting the number
of hours of operation per day may well be unsatisfactory to
the buyer. It is sometime s necessary for the buyer to
think in terms of continuous operation in order to m eet
production schedules . To lirrit the number of h urs of
o eration per day could make it necessary or t he buyer to
purch 0e additional units of uc ma chine tool . ven
thou h sch limit might bes tisfactory for the produc tion of the pr oduct for whi ch the machine tool was pur chased , it is possible that the very next product to be
run on the machine tool mig t require more tha
ei t - hour - per- y productio . Therefore , by im osin
uch a con ition , them nu ct er may com lie te the
buyer ' s pl ns for future operation of the m chine tool t o
t he extent of cons i derin the m chine tools of m nuf ctu rers who do not i mpos e sue a conditio , or to ne gotiate
i t h the seller of the machine tool in an effort to have
the condi t ion changed .
II . EX TY PRO IBITI
Result s of survey. Table VIII shows t he nu be r of
machine tool manufacturers i n the survey who have i ncor porate d spe ci fic prohibiti ons into t he i r standa r d expres s
warrant y clause s .
T LE VIII
. PRE '1 . ~ W R t TY OHIBITIO \J
142 11 ·. UF ' C TU R~ 0 11 C HI E TO L
1
Prohi bi t ion of N o . of
64
pre ss . ~ arrant y r f r
•
ercentage
Cos t s of damage s c nnot be charged
t o the manufacturer
• • • • • • • • •
32
• • •
22 . 5
Cost of unauthorize d repairs c nnot
be ch r ge to th manu acturer .
• • •
22
• • •
15. 5
Costs of e pense s , includin labor
for i nstall tion nd loss of time,
cannot be ch rged tom nufacturer
• •
8
• • •
5.6
o e specified .
• • • • • • • • • • • •
92
• • •
64 . 8
~ · ileitis to e noted from T ble VIII th t about 65 per
ce t of the ma chine tool manufacturer s of the u vey do no t
65
include prohibitions in their expres s warranty clause s , it
remains that one manufacturer out of five does go on record
as refusing to pay t he costs of damag e s , while lesser
numbers refuse to pay the costs of unauthorized r epairs and
of various expenses.
Loss .Q£. damages. One of the reasons for the buyer
to accumulate damage costs would be i f the particular
machine tool t hat had been purchased , failed to pr oduce
the tolerance or finish required by the buyer's customer .
If the buyer had already run a group of parts that would
not pass inspection, the buyer would be liable for the cost
of the parts. In addition, the buyer's custom er woul d
probably ask the buyer to purchase a machine tool that
would produce the necessary tolerance or finish . However,
if the buyer's customer di d not choose to wait for t he
buyer to procure such a ma chine tool , the work woul be
placed elsewhere. The spoilage cost, t he additional
machine tool cost or the loss of a customer, would all
resul t i n a loss or damage s for the buyer .
In any of these situations , the manufacturer dis
claims any re sponsibility and expressly forbids the buyer
to submit a claim for co sts involved in such damage situa tions. In those case s here the machine tool fails to
produce t he necessary tolerance and fini~h , the manufacturer
take s the position that t e buyer did not properly
66
investigate the capabilities of the machine tool prior to
purchase, or did not properly train the operator to effec
tively operate the machine tool. The manufacturer feels
that the machine tool is no longer under his control, but
that control has passed on to the buyer and his operator.
It is the manufacturer's position that the buyer must
properly acquaint himself with the capabilities and per formance characteristic s of the machine tool , that the
buyer must install satisfactory safety devices to protect
the operator, and that the buyer must adequately train the
operator so that the machine tool is operated effectively
to satisfy the requirements of the buyer ' s customer. Since
in matters of machine tool capability, of proper safety
devices and adequate operator training , the manufacturer
can advise but not control, it would appear that the buyer
should be responsible in such matters.
Unauthorized repairs. Another situation in which
the manufacturer disclaims responsibility and expressly
forbids the buyer to submit a cla im , is when the buyer
makes unauthorized repairs to the machine tool . An
unauthorized repair is one that is made prior to the time
of informing the manufacturer abo t the ne ed for such a
repair. u c situations usuall arise when the buyer is
pressed to intain a produc ion sched le and w e he feels
t the can reco nize what is wrong nd feels that he can
67
make the repairs. There is a natural tendency for the
buyer in such situations to go ahead and m ake these slight
repairs in order to maintain production . There is also a
tendency for the buyer to charge the m anufacturer for the
cost of such repair s on t he ba ~i s thats ch costs resul t
from ef ec t in or km n hi p and material agains t which the
ma chine t ool i warr nte d .
The m nufacture r , in discl iming such co sts, point s
to the f act that the buyer i s obligate d to notify t he manu facturer of t he defect and t o give t he manuf acturer the
opportunity to correct the defect, depending upon the
result of the manufacturer ' s examination of the defect .
The whole procedure for the correction of defects is worth less unless it is given the opportunity to function. The
manufacturer does not feel that he can underwrite his ow n
procedure for the correction of defects and a t t he same
t i m e , permit buyers t o proceed ith r epair s tha t have not
been authorized by t he manufacture r .
lJhen the manufac t urer is given the opportunity to
inspe c t t he def ect, and when t he m ost pr actical solution
seems to be for the buyer to make t he necessary repairs,
the manufacturer in sue situations authorizes the buyer
to proceed and to char e the manufacturer for the co~ts of
such authorized re pairs . In these cases, the manufacturer
often dvi se s the uyer ho1 to proceed o t ha t t he re pair
cost s are not undul y i h as a r e ul t of ot o ing t he
m os t eff ic i ent m ethod of performing t he r epair wor k .
Ins t allation expense . nle s s othe r wi se pecifie
68
in t he purcha e contract, the manufacturer refus e s t o honor
cla i ms fo r t he cos t s i nvolve d i n t he i nstallation of the
ma chine tool . In t he usual ca se , the ma chine tool i s sold
on t he basis that it will be loaded on a common carrier at
t he manufacturer ' s pl ant . s a result , the buyer m ust
assume the costs of i ns t alla t ion , i ncluding the construc tion of t he f oundation , t he tie - down bolt s , the l eveling
bl ocks , and any nece ssary labor involve d in setti ng t he
m achine tool i n place .
Becaus e som e buyer s fa i l to unders t and such an
arran gem en t , t hey occa sional ly attem pt to cha r ge t he
manuf acture r f or t he costs i nvolved i n ins t alla t ion . . hen
such a cla i m is pr e sented a s a r esult of t he original
insta l l ati on of t he m chine t ool , t he buyer has li t tl e
basis for the cla i m. 1Ioi.veve r , t he buyer ' s cla i m f or
i ns t llati on costs seems t o s me m ore val idi ty in thos e
situa t ions where th manufactur e r admits t hat there is a
efe c t in materi 1 o wor kmanship and instruct s the buyer
t o retur n t he def ective part to t he man f cture r ' s pl ant .
I thes e situ ti on s , t he cost s for di s s embly and ·ns t all
tion after t he r epair s have een m de , can r e sult i n a
s b~ t ant i 1 amount o mone . The b yer oes o f el t h t
69
he should ssume such costs ue to the f ct that them nu facturer h s admitted that the machine tool was not free
of defects in material and orkm nship N hen it as sold .
Consequently , the buyer hold s the position that the costs
incurre in disasse mbly and in installa t ion after the
repairs have been made , should be borne by the manufacturer.
Te position oft e manufacturer is based on the
proposition that if such costs are to be assumed by the
manuf acturer , the price of t he machine tool must be
increased to all buyers . The price increase would be set
upon the ba is of pas t experience nd such an approach
woul d be quite ifficult with new model s or speci 1 ma chine
tools for hi ch t here would be no existing records upon
which to calculate possible cost for disas sembly and
installation after the re pairs had been made . f further
difficulty would bet e matter of havin all of the manu facturers of a cert in type and m ode l of machine tool arrive
t the sam e estimate for such cost . s a resul t of these
many dif iculties in arrivin a t cot figure, m nuf ctu rers have di cl im d responsib "lity for th cos o disa -
sembly nd inst llation fter rep irs have bee m de, even
though they have dmitted responsibility forte defect in
material or ork anship involve d i them tter . ~· hile in
m ny ca e t e cost my e of no gre t si nificance to the
buyer, there are ~itu tio \ e e the cost m y ell be o
great significance and t he m tter thereby becomes orthy
of further consi eration by both t he manuf acturer and the
buyer .
III . M RY OJ C ONDITT DP O IBITI N
Protection f or manufacturer . The survey results
0
have shown that some manufacturers have ad ed to their
expre ss w arranty provisions certain conditions and prohibi t ions to protect the selves from the possible co sts of
ce r tain unfavorable situations . Chief amon
0
the conditions
are that the buyer shoul subjec t the machine tool to norm al
and pr oper usage nd tha t t he warranty would expire if the
ownership of the machine tool changed prior to t he end of
the w rranty period . Chief among t he prohibiti ons are t ha t
the manufacturer disclaims any costs tha t might be incurre d
by t he buyer for damages or for unauthorized repairs .
It is evi dent tha t t hese conditions and prohibitions
work to the advanta ge of the manufacturer in order to pro tect him from t hose si t u tions ~ erei the machine tool is
abused , or the operator not adequately trained , or material
handling eq ipment not properly incorporate d , or re pair s
made without first notifying the manuf acturer or his repre sentative . In t hose it ations where the manuf cturer does
not have satisf ctory procedure or the repair or the
71
re placement of defective material and work an hi, the
buyer may be at a gre a t di sadvantage due to the los of
time and produc t i on .
It would ppear t hat the main concern of manufactu rers, as reflected by these condition s an prohibitions, is
the cost that could result if t he repair and re placem ent of
defective material and workmanship were allow ed to proceed
without some m easure of control. There are situations
that demand the outside opinion of an impartial arbiter,
but i n most cases, it would appear that the manufacturer
should be , on the basis of wide experience with the machine
tools , the judge of what constitutes normal and proper
usage. As to the matter of notification , the manuf a cture r
wants to ins pect each defect i n material and workmanship
not only to be sure that it exists , but also to be able to
t ake action so as to el imi nate any more similar defect s .
Fur t hermore, the manuf acturer sks for promp t notification
so t hat corrections can be made as economically as possible .
The se demands on the part of the manuf acture r would appea r
to be essenti 1 to he practical operation of his business .
To be questioned by the buyer is t he condition that
the rarr anty is good only if the machine tool is used on an
eight - hour- per- d y basis , and such a prohibition th t is cl i ms the cost of assembly and ins allation fter the
defect a been r e p ired , even though the defect in work manship an m terial is mitted .
C PTE V
CO ECTION OF DEFECT UNDE E PRE R ANTI
In order to provide for these situations in which a
defect is discovered by the buyer within the specified
warranty period, many manufacturers establish a procedure
in their express warranty provisions to instruct the buyer
as to the conditions and m ethodology involved in se curing
the correction of defect s in workmanship and material .
The pur pose of this chapter is to (1 ) examine the
features of the common procedure for the correction of
defects in material and workmanship; (2) present the
advantages and disadvant ages of the common procedure to
both the buyer and the manufacturer; and (3) consider the
practical application of this procedure for the correction
of defects.
The correction procedure is of grea t impor tance to
both the manufacturer and the buyer . hile the sections
dealing wi t h the objects war r anted and the period of the
warranty appear to be of primary importance, the time and
cost involved in replacing or repairing defects in workman ship and material can also be matters of considerable
consequence. The action of the manufacture r in making
the repair or replac e ent has an effect upon his reputation
for standing behind the machine tool . The uyer , for his
part , will feel that the express warranty is wort le s
without a correction procedure that provides for the
maximum use of the machine tool in terms of minimizing
the time lost for the correction of defect s .
I. CR EC TION RO CEDU
Results of survey. Table IX shows a breakdown of
the various elements of the common correction procedure as
they are employe d by the 142 manufacturers of the survey
in their expre ss warranty clauses .
T BL IX
ELEME T OF C ORREC TION PRO CEDU
j_42 l-1.ANUFA CTURERS OF M CHI E TOOL - i
Elements of Correction
Procedure
D efective part is subject to
No . of
M frs . Percentage
manufacturer's inspection ....... 81 ... 57 . 0
Defective part must be returned ,
frei ght prepaid , to the
manufactu.rer's plant .... .. ... 87 ... 61 . 3
Defective part, subject to
manufacturer's inspection ,
will be replace d , f . o . b .
M anufacturer' s plant . . . . . . . . . 68 . . . 47 . 9
D efective part , subjectto
manufacturer ' s option , will
be replaced or repaired ..... . .. 38 ... 26 . 8
Defective part will be replaced
or repaire free of charge ...... 68 ... 47 . 9
Table I X shows that the elements of the common correction
procedure are (1) to return the part to the manu acturer ' s
3
plant on prep id freight basis · (2) to s bject the efec-
tive part o the man fact rer ' s inspectio i orde to
verify the existence of the defect in workmanship and
material; (3) to furnish a replacement for the efective
part , with some manufacturer ' s reserving the right to
repair the defective part, such replacement or repaired
part to be furnished on board a comma carrier at the
manufacturer ' s plant; and (4) to provide the replac ement
or repaired part on a "no charge" basis . In short, the
correction procedure is an agreement by the manufacturer
to replace or repair defects in workmanship and material
free of char e, providing them nufacturer is given the
opportunity to verify the defects and further, providing
the buyer pays the cost of the freight to and from the
manufacturer ' s plant .
74-
Right to inspection. The machine tool manufacturer
reserves the right to examine the part in or der to verify
the buyer's claim as to the defect in workmanship and
material. There are several reasons for reserving such
a right.
e of the reasons is to influence the uyer to make
a claim only in those cases where an actual defect exists .
There have probably bee situations in which buyers have
trie to sec re replace ent or repaired parts as a result
of improper operation or carelessness. The manufacturer,
by reservi g the ri ht to inspect the part, feels th the
is ereb eliminating some of the claims that mig t result
from causes other th efects in workm nship nd
75
ter· 1 .
If the examination sho\ s that the defect is the result of
c rele ss operation or abuse of the achine tool, the anu facturer may not be willing to repla ce or repair the
defective art under the provisions of the expres \ rr nty
clause .
. nother reason for the manufacturer to insist on
the ri ht to ins ection of the defective part is that the
m nufacturer ants to satisfy himself s to the cause of
t e defect . If the c use of the defect is in the basic
desi n , or if it developed in the proces s of manufacture ,
or if it resulted fro the use of the wrong material for
that particular application , or if it as simply overlooked
in the inspection procedure, or for any other reason , the
manufacturer must learn the reason for the defect in order
to take remedial action and eli inate the cause .
~ third reason for inspection to verify the defect
is not only to correct the cause of the defect, but lso
t o use hatever information is derive d from such
.
n exami -
nation for the im rovement oft e ma hine tool . The cor rection of the defect may require t ere esign of a certain
p rt or sem ly that ill , in turn , make a consi er ble
· rn rov ment in the performance or effici cy o t e chine
tool . I i~ not po sible or them chine tool nuf ct rer
to simul te in his lat all of the condition that ill
e ncounter d y u to ers i th ir v rio s pl t~ d
76
therefo e e por o y defe con tit te one o the i n
source of inform tion to be use d s a b sis or cor ecting
i mprovin the performance of t he m chine tool .
There are some buyer s who ma y resent the manufac
turer' s insistence upon verification of t he efect on the
basis that the buyer i s in the best position to know about
the defect and tha t the manuf acturer should accept t he
buyer' s claim without further examination . There are
other buyers who acc ept the manuf acturer's insistence
upon verification of the defect because of an appreciation
of the problems i nvolve d ; however , their understandin is
continge t upon the m nu cturer performing the ins pection
as expeditiously ~ possible in order to mini mize the tim e
tha t the m achine tool N ill not be in operation . For this
reason, many ma chine tool manufac t urers have qualified
re presentative s in the fie l d who can be called into the
buyer's plant on short notice and who can certify on the
spot t ha t the defect is one resulting from an error in
manufacturing an no t from carele s s oper tion or abuse.
eturn of defect i ve part . The manufacturer, as part
of the common correc t ion procedure , usually r equest th t
the defective p rt be retur ned o t he m nuf cturer ' s plant .
ven tho gh t here i a q lified repre ent tive in the
field , it is at t e manuf cturer ' s pl nt that the best
ins pection of t he de ective p rt can be m e . The desi ner,
77
the production nd inspectio people , can all examine the
part nd collectively arrive at t he best course to take in
order to elimin te such a defect in the current and the
future machine tools being produced a t the particular
plant . This corrective action t the manufacturer ' s plant
is of great importance because it serves to eliminate a
condition that might result in a considerable expense to
the manufacturer as Fell as future buyers in the event that
a large number of the same defect is di scovered .
The manufacturer not only may request t ha t t he
defective part be returned to the manufacturer ' s plant ,
but in such an event, he also insists that the part be
r eturned on a prepaid freight basis . This means that the
buyer must bear the expense of returning the defective part
to the manufacturer ' s plant . The manufacturer , i n taking
such a position, is trying to avoid another contingency
expense that i s almost impossible to estimate or pl an for
in advance . The awareness of the fact that some ma chine
tools are shi pped to distant parts of the United States and
tha t others re sh · p ed overseas , and furthermore , that
such lon distance freight hauls c n involve considerable
cost , make s the anufactur r feel tha he cannot ssume
such an unkno liabilit .
The buyer , while ccepting in most cases the anu f cturer ' s ri ght to ve ify the defec t , doe s not favor the
acceptance o the cost involve d to return the defectiv
78
part to them nu cturer ' s plant . The common r r an e ent is
for the machine tool to be sol on the bas i s that it i
loa ed on common carrier a t t he manufacturer 's pl ant .
s a result, the buyer usually pays the cost of the frei ght
from the manufact er ' s plant to the buyer' s lant . The
buyer feel s tha t the anufacturer should h ve provided a
ma chine tool free of ny defect in workmanship and material
and, therefore , in those cases where a defect is di s covered,
the cos t of returning the defective part to the manuf ac
turer's pl ant shoul d be borne by the manufacturer re gard le ss of the pur pose for hich the defective part is
returne d . It is the buyer ' s position th t the m ~chine
tool manuf acture r has guar anteed the product t o be free
of defect s i n ateri 1 and workmanship when it left the
manufacturer ' s pl n t and consequently, t he di scovered
defect cannot be the responsibility of t he buyer .
Under the arrangem ent where the buyer mus t return
the defective part t o the pl ant of t he manufacture r , it i s
als o ne ce ssary for t he buyer to be r the expens e of r emov ing the defective nar t from t he machi ne tool . The size of
t he ma chine tool , its design , the location of t he efective
part an many ot her fac tors influence t he cost involved in
t he re mov 1 of the defective part . In any case , it remains
tha t the r emoval cos t con titu e s a other expe se to be
borne the uyer . T is is nother expense , lon ith
t e co t t an port tion of the de ective p rt , th t t he
7
buyer feels should be assumed by the manufacturer on the
basis that the machine tool was gu r anteed to be free of
such defects in material and workmanship when it was
shipped from the manufacturer ' s plant. The manufacturer,
in refusing to assume the cost involved in removing the
defective part from the machine tool, is again trying to
avoid another contingency expe se that is almost impossible
to estimate or plan for in dvance . Even if it were pos sible to establish standards for the rem oval of defective
parts , the m anufacturer points out that labor rates and
methods of operation are not uniform throughout the United
0tates or overseas and these many complexities make it
impractical for the manufacturer t o assume such an
obligation.
In those cases whe r e the manufacturer has a l ar ge
national organization, the local representative of the
manufacturer often is called in to advise the buyer as to
the removal of the defective part. uch technical assist
ance can reduce the cost of removal considerably as a
result of using the best nd easiest met od for reaching
the defective part . In some cases, the ma ufacturer has
found by past experience that it is dvantageous for him
to have the local representative remove cert in or 11 the
defective parts bee use of the d age done to the machine
tool when inexperienced 1 bor ttempts s c job . now led e of the correct methodolo
0
toe ply in the removal
80
operation may well avoid amage to other parts or avoid
impairing the a ccur acy of the ma chine tool . owever , even
in those cases where the local re presentative of the manu facturer may undertake t o rem ove the defective part, the
removal cost is reduce but not elim i ate d due t o t he
nece s i ty of usuall h vi g the assist nee of the buyer' s
operator or som e other ma i nten nee l abor .
It r emains that t he costs involved in the return of
the defective part, whether frei ght and disassembly or
freight and part of disas sembly, are one of the most con
troversial parts of the express warranty clause s of machine
tool manufacturers. The buyer feels that such costs should
be assumed by the manufacturer on the grounds that the
machine tool was warr nte d to be free of such defects at
the time it was shipped from t he manufacturer' s plant .
The manufacturer feel s that such costs cannot be assumed
because they are contingency expenses of i ndefinite scope .
ter t he defective part has
been re turne d t o t he m nufactur er ' s l ant a t t he buyer '
expense , and f te r t he m nufa cturer ha s verifie d by his
own inspection th t there is a defect in material and work
manship , the common correction procedure provide s that t he
man facturer will replace such defective part with one that
is free of defects . The replacement part must be of the
correct size and description tot ke the pl ace of the
81
removed defective p t . It is as s m ed th t the manufacturer
will maintain an inventory of such re placement p rts so
th t they will be re dily vai l able when the need ri ses.
· bile the replacement part mus t be of the correct
size and description, it doe s not nece sarily follow that
it must be a new part. ome m nufacturers reserve the
option to provide the necessary re placement part either by
a new par t or by repairing the defective part. It is
obvious tha t if the defective part can be repaired so as
to be free of defects, the manufacturer can probably save
the cost involved in producing the new part which , in most
cases , would be greater than repairing the defective part .
It is the manufacturer who must decide as to whether or
not the repaire d part will serve as well as a new par t .
This option to repair the defective part is not always
satisfactory to the buyer w ho feels that the machine tool
manufacturer is obliga ted to provide a new replacement
part on the basis that it replaces a defective part of a
new machine tool that was warranted to be free of such
defects . or many buyers , the man f cturer' s assumption
tha t satisfactorily repaired defective part is as good
s a new replacement part, is something like putting used
spare parts on a e\ ma chine tool. Because of such a
feelin g on the part of many buyers , manufacturers ho hold
to such
policy sometimes are unable to achieve the
buyer' s c e ptance o the replace ent p rt until new
part has been f urni hed .
It is generally pre sumed tha t the re 1 cement or
repaire d part ill be furnished by them nufacturer f ree
of char ge. nly 48 per cent of the express warranty
82
clauses of the s rvey specific lly s t ate that the re pl ace
ment or repaired part will be rovided ithout cost to t he
buyer . ,A hether it · so st ted in t he express warranty
clause or not, buyers generally expect th t the m anufacturer
is obliga te d to provide the re pl cement part a t hi s expense.
Those manufacturers w ho do not incl de the provision that
the part will e provided free of cha r ge, are probably
leaving t he ay open to cha r ge the buyer in t hose cases
where it appears tha t the defect is the result of careles s
operation or abuse rather than an error i n m nufacturing .
ince the cost of t he re pl ac ement part is often consider
able, t he actual s t atement as to whether or nots ch parts
will be provi ed to the buyer free of charge, is matter
of i mportance to both the manuf ctur er and the buyer.
I n re pl acing the defecti e part , the co m on correc
tion proce ure provides tha t the part will be furnished
by the m nu act rer as loaded on a common c rrier a t the
m n f acturer ' s pl an . his means tha t the uyer mus t
ssum e t he cost o the f rei ht for the re pl cement part
fror t hem nu cturer's l ant to th u er' s 1 nt . n
additi o tote frei ht cot, it neces s ril follows tha t
83
the buyer must also assume the cost involved to instal l the
replacement part in the machine tool . sin the situation
where the buyer had to remove the defective part from the
machine too~ and bear the cost of freight of such defective
part to the manufacturer's plant , the same arguments apply
to the situation where the buyer must bear the cost of
freight of the replacement part from the manufacturer's
plant to the buyer's plant and in addition, the cost of
installation of the replacement part in the machine tool.
The buyer, in most cases, purchased the machine tool on the
basis that it would be loaded on a common carrier at the
manufacturer's plant . In paying the freight for the
replacement part, the buyer feels that the cost of freight
on the repla cement part is being assumed for the se cond
time even though t he machine tool was originally warranted
to be free of def ects in material and workmanship . For the
same reason, the buyer does not feel that he should assume
the costs of installing the repl cement art in the machine
tool. The manufacturer, for his part , feels that it is
impractical to assume the contingency costs resulting from
the transportation of the replacement part to the buyer ' s
plant and installing such replace ent part · the buyer 's
machine tool. These costs are also one of t he most con
troversial parts of the express warranty clauses of achine
tool manufac t urers .
84
II. ON CO RECTI N ROCEDURE
Common procedure. It appears that the manufacturers
of machine tool s in the survey are willing to replace or
repair parts that bear defect s in material and workmanship .
While the part itself is usually provided free of charge,
the buyer i s expected to assume t he cost involved to remove
the defective part from the machine tool, to ship the
defective part from the buyer' s plant to the manufacturer's
plant, to ship the replacement part f rom t he manufacturer's
plant to t he buyer ' s plant , and to install the replacement
part in the ma chine tool .
Costs involved. Under the common correction proce
dure, the manufacturer is expected to maintain a stock of
replacem ent part s to take care of situations in whi ch a
defect is discovered by the buyer . The manufacturer some
times reduces the cost of replacement parts by exercising
the option to repair the defective part rather than provide
a new part . The buyer , on the other hand , is expected to
assume the costs i nvolved in the removal of the defective
part , the shipment of the defective part to the manufac turer's plant an the shi pment of t he replacement part to
the buyer ' s plant , and the cost of installing the replace
ment part . Even t hough t he costs involved in the replace ment of a efective part result from an engineering or
85
manufacturing error on t e part of the manufacturer, it is
apparent that the buyer is required to ssume larges are
of the expenses involved in the correctio of such
defective parts .
Effect on period. The express warr nty clause for
t he machine tool usually covers a definite period of a
certain number of months . 1hen that certain number of
months has passed after the starting date , the benefits
reserved for the buyer cease. Under the common correction
procedure, there is no provision for an extension of the
express warranty period in t hose cases where it is neces
sary to replace a defective part . This can result in a
disadvanta ge to the buyer who has not be en able to install
and operate the machine tool during the early part of the
express warranty period . If the defective part is actually
the result of a fundamental defect in design , the warr anty
period may have expired before it is possible to discern
the real case of t he defect . anufacturers, for their
part , a re reluctant to extend the length of the express
warrant y period in or der to cover such situations and ,
therefore , treat such situ tions on t he basis of their
i ndividual merits . It would appea r t hat t he purpose of
the co m on correction procedure would be nullified in those
case s vhere here i not sufficient time to discover the
re 1 ca se for he defe tin material and workm nship .
C PTER VI
SUMMARY ON E XP A NTY
The express warranty provision of the machine tool
manufacturer appears to be t he principal basis upon whi ch
the buyer relies i n regar d to certain objects of considera
tion at the time of purchase, such as the material, work manship and design . hen it is incorporated into the
ruling document existing between t he buyer and the seller,
the express warranty provision becomes the m eans for the
buyer to obtain the quality of the machine tool that was
bargained for dur i ng the negotiations prior to the sale .
I n order to substanti .te such a premise , it is the
purpose of thi s chapter to (1) sum rize the na ysis of
the expre ss rrant y provisions c ommon m ong the 142
manufa cturer s of achine tools who participated in the
survey tha t was the basis for thi s study , and (2) restate
the proble m s involved in securing satisfaction for both
the buyer and the manufacturer i n those situations where
claim s are filed relative to defect s in the objects
expressly warranted .
I . C 0 ITIO
ajor components. hile the express warranty pro-
vision of one manufacturer is different or more involved
than the provisio of another m nuf acturer , it my be
87
generally concluded tha t t e express w rranty for a m chine
tool, in its m os t complete form, consists o five di tinct
p rts, n m ely, (1) the ob ·ects , (2 ) the period , (3) t he
conditions, (4 ) t he prohibitions , and (5) the correcti on
procedure . The se five p rts are se p te one fro l the
other nd can be recognize d w hen revie N i ng he expres ~
war r anty provision .
For example, t he following clause contains each of
the major component s of a typical express warranty of a
machine tool manufacturer:
The "X" 1 '-1achine Tool anufacturing C ompany ,Narrants
each machine tool built by us to be free of defects in
material and workmanship for a peri od of six months
from the da te of shipment f rom the factory , when given
norma l and proper usage and when o ned by the original
purchaser. ~ ·le do not undertake liability for i ndirect
or consequential d mag e of any nature or due to any
caus e . . 11 purchas ed items will be guaranteed only
i nsof a r a s nd to the extent that the supplier of t hese
items guarantee s them to us . The manufacturer' s lia bility under t his arr nty sh 11 be l i m i ted to re pla cm g
free of ch rge, f . o . b . Cleveland , O hio , any such p rt
f ound o be defective by our examination vri thin the
period of t his warranty, but the manuf acturer will not
be res ponsible for tr nsportation charges . Parts which
are cla i m ed t o be defective , but which sho t an ible
evidence of abuse will not be re pl ace d on no char e
basis .
In the fir t place , the clause shown above s t ates th t the
manufacturer e pressly wa ra s them hine tool to be f ree
of defects i n t he ob · ct s o materi al and orkm n hi p .
~econdly , t e clause poi n t s out t ha t t he ex res N rr n t y
period ill begi on he d te t t t e chi ne tool i s
s i pped fr om he manu act rer ' s f c ory , and urtherm ore ,
that the express arranty perio will co1 ti ue for six
month after such a date . Thirdly , the clause imposes
upon the buyer two conditions which are that the machine
tool must be given normal and proper usage and further ,
88
that the expres arranty will e~pire if the ori in 1 buyer
should ell the achine tool . Int e or
clause decl res ht e m acturer . ·11
pl ce, the
t assu e y
liability for i · ect or conse ue ti 1 dam e ,
. .
r o l -
tion on t e u e not to ch ge the m a u cturer f or the
co~t s re sulting rom damag e ~ reg rdle-s o t e c use . I
the fifth pl a ce , the claus e establishes a correcti on pr o cedure in the event tha t a defect is di covered in the
object ~ expressly warranted , such a procedure including
the elements of the manufacturer ' s right to inspect the
defective part , the buyer ' s obligation to assume the costs
of transportation , and the manufacturer ' s willingness to
replace the defective part free of cha r ge providing that
there is no tangible evidence of abuse . urther examina-
tion of the typical claus e shown above reveals that the
manu
0
acturer warrants all outsi e purchased items only to
the extent th t the supplier guar antees such items to the
manufacturer . Inc ider tion of the pr oblem of tr ns -
- ortation costs , it is ap arent t a t the manufacturer ' s
f ctory in the cl use sho vn bove is loc te d t
i o .
evelan ,
89
ch of t hese m ·or compone ts ha a speci 1 i m or t nee t o both the m anuf acturer and the buyer . There c n be
no claims f or defects without clear description of the
objects expressly warrante . The express w rranty 1ould be
ifficult to ascert in ere it not for the est blishment of
the startin date of the warranty period and for the fixing
of the num ber of month..., after uch d te tha t the warranty
period would be in effect . There woul d be no restraints on
the actions of unprinciple d byers if t he express w rranty
clause di d ot set f ort s om e condition s for t he buye r to
bide by i n order t o ma i n t i n eligibility under t he pr ovi
_i on of t he ex r ess w rr nty cl se . ~a uf acturer s oul d
be li ble f or r1 y ...,iz ble chc r ge s if t hey f iled to
pr otect t hemselve s fro 1 d m
0
e cl i ms developing out of
indirect and con sequential dam ge s . ..Jithout a definite
correction proce dure , e ch and every cla i m for a defect in
the objects expressly warranted ould result in a special
negotiation .
It ppea r s tha t com plete ex ress warranty clause
for m chi ne t ool s shoul i nclude al l five of the ma ·or
com onen t s . he omi s i on of ny one o t he five m j or
components opens an are t o negoti t ion , hi ch ·n t ur n
serve s t o i ncrea et e buye r ' s idle tim e vith t he m chi n
tool, c om licate s the m nuf acturer ' s oper tions in t he
fiel, nd i ncrea se s t he expen e s of both p rtie . here
are m any different way of expre- s i n the se m a jor
90
component s but it is necessary to incl de each o e i so e
form in the expre ss warranty provision . om e o the clauses
of the survey cover ed sever 1 printed pages wherea s ot er
clauses were limited t o as fe w as fifty ords . It is
eviden t tha t manufa cturers , producing simil a r rodu ts
and sellin them to the same group of buyers , hold a wi de
di fferen ce of opinion ~ to the egree of pecifici ty
needed in their expre ss w rranty claus e s . Table X shows
ho explicit the 142 m a chi ne to 1 m nuf cturers in t e
survey were in r egard to t he five ma ·or components of the
express warranty clause .
TABLE
u ~E OF FI VE } J OR C PO EN T I
THE EXP RE V J R TY CL USE
142 ~ NUFAC TURE u OF MAC H INE TOOL
Five M ajor Components
1. Specify the object s expressly
o. of
frs .
warranted ...•....•.•.. 139 .
2. (a) Establish the lengt h of
the warranty period .•.... 137 .
(b) Establish a starting date
for the warrant y period .... 124 .
3. Incorporate certain conditions
into express warranty clause •••. 86 .
4. Impose certain prohibitions
upon buyer in warrant y clause ... 50 .
5. Institute a correction pr ocedure
in the express warr ant y cla se .•. 114 .
er cent age
• •
• •
• •
• •
• •
• •
97 . 9
96 . 5
87 .3
60 . 6
35 . 2
80 .3
The i mportance atta ched t o ea ch of the fiv e major compo nents by t he 142 machine tool manuf cturer s is a matter of
wide vari nee , as is shown i Table
•
dhereas lmost all
of the manufacturers name the objects expressly warranted ,
only about one in every three impose prohibitions relative
to costs resulting from damages , repairs , and installation
expenses .
ince it is app rent th t m ny machine tool manu-
facturers in the survey omit one or m re of the
.
a or
components of the ex ress w rranty clause , it follo1s that
when disputes arise concerning aspect s of such components ,
there is no established policy upon which a solution can
be resolved . The divergent views of the buyer nd the
m nufacturer must be brought together by means of
negotiation .
II . BASIC ill-'IPTION
Party rights. oth the manufacturer and the buyer ,
as parties to the express warranty cla se for a machine
tool, have certain rights that have culminated under
expre s arranty provisions from th ir b sic ob·ectives .
Forte buyer , upo paym ent of de consideration ,
these ri g ts may be listed as follows: (1) the right to
receive from the manufacturer a chine tool that is free
o defects int e ob ·ect s expres ly warr anted , 1hether it
i in the matt r of design , m terial, ifork ans ip, co -
1
tr ctio , patent "nfr i ement or other object · ( 2) t e
t fro 1 t e £ t rer, rr y
9
p rio wi t h n e blis e ~t tin d t o ici nt
le t h t , ccomplish the purpose oft e warranty period ,
namely, to iscover defect s in the ob·ects ex ressly war ranted· and (3) the ri ght to receive fro the manufacturer
an establishe d procedure for the correction of defective
parts that expeditiously provi es replacement parts free
of charge other than the costs of disas embly and
reinstallation .
~or the manufacturer , these rights may be listed a s
follo . s: (1) the right to expect the buyer to purchas e a
machine tool of sufficient c pacity to perform the required
work nd t o use it ithout abuse or negli gence; (2) the
ri ht to expect the buyer to furnish prompt noti ic tion
pon the d "scove y of y e ect int e o ·ect s exp e ~sly
Na r c nted , within t e e s t a li hed r rranty _ eriod ; (3 t e
r"
0
ht t o em e y defect s , i ncl i g t he right toe amine
the def ective part , the ight to furnish replacement
part or to repair the defective part , nd the right to
refuse to honor cl is for damage s , unauthorize rep irs
and install tio cos t s .
arty oblig tions. Both t hem nufacturer an the
b yer , s parties to the expres warranty cl use for a
m chine too , h ve certain obligations .
or the b yer , th se obli ations m y be iste s
follo : (1) in o der to hold t he ri ht to receive
3
machine tool th tis free of defect in the objects
expressly r rranted, the buyer must insure th t the o jects
re expre sse i the warr nty provision· (2) in order t o
receive an express arr nty eriod th tis of sufficient
length to a ccomplish it p r pose , the buyer must insure
that period of sue le gth is provided in the expres s
,arranty provision; and (3) in order to be able to achieve
satisf ction i the event th t efect is iscovere in
the objects expres sly warranted, the buyer must insist upon
a correction procedure with the necess ary features for
attaining prompt replacement of defective parts free of
charge.
For t he manufacturer , these obligations may be
listed as follows : (1) in order to assis t the buyer in the
purchase of a machine tool with sufficient capacity to
perform the require d frork , the manuf acturer mus t provide
the necessary i nfor matio relative to performance prior
to the sale; (2) in order to m int ain the ri ght to deter
mine tha t a defect i the result of bus e or egligen e
r ther t n the res 1 of m uf cturing error, t he
m nuf cturer mus exercise such ri h t N ith f irne s for
both partie~; (3 ) i n order to m a i n in the right to demand
pro mp t notificati o of any efect in he objects expressly
arranted, the nuf ct rer mu t e so org
•
ize tha t the
buyer ccn be pr ovi ed with he re pl cem ent ar t promptly ,
t hereby i i mizin th do 1ntime or t he m chine t ool; n
(4 ) in order to practice the right to reme y defects , the
m nufacturer mus t st nd ready to return the machine tool to
a condition in hich it will per~or in accordanc e ith t he
standards under which it was sold, nd not merely furnish
replacement or repaired parts.
Party privileges. Both them nufacturer and the
buyer, as parties to the express warranty clause for a
machine tool, have certain privile ges.
For the buyer, these pri.vileges may be listed s
follows: (1 ) in order t o secure certain rights and to
demand certa i n oblig tions , the buyer has the privilege of
makin
0
the ex ress warranty cl e n ea ch of it compo
nent pa t a matter to be e solve d d rin ne gotiations
prior to the sale of the ma c ine tool; and (2) in order
to avoid any delay in the re pair of ma chine tool, the
buyer has the privile ge of i gnoring the correction proce
dure of the express w rranty clause , provi ing that the
buyer is illing to brogate his rights under the warranty
clause.
For the manufacturer , these privileges may be listed
as follows : (1) in order to be a ssured of an express war
ranty provision that is pr actical in its appli cation for
both parties, the manuf cturer has the privilege of pl acing
emphasis pon such a cla se ring the ne oti tions prior
to the sale oft e machi e tool· nd (2) in order to
95
m ainta i n t he i ·ti tive i n atter de 1 · with t e ex res
rr t cl use, the □anu ctu e r h st e privile e of
inve sti g ti on and e s r h m o g user s in t he f i eld in
order to explore the possiblity of a ding to the objects
expressly warranted , of extendin the length of the express
warranty period and of accelerating the correction
procedure.
Party limitations, Both the m anufacturer and the
buyer, as parties to the expres s warr nty clause for a
machine tool , are sub ject to certa i n limitations in r e a r d
to the rights and obli ations reserve d to ea ch par ty . The
ri ghts and obligations ea ch party hol ds under the express
w rranty clau se s pecific l l y des cr i bed
.
the clause are in
itself . The re .s 0 ction nd the rule s of oper tion
within e ch a r e are express e in the .r r anty cla se . ·nly
t he 0
j ect ,.,
t h t re n m e r e to be considered a s expr essly
warrante d . O nly during t he wa r r ant y period does the manu-
facturer guarantee the defect s i n t he objects expressly
warranted . Only t he provisions of the correction procedure
govern the re pl acem ent or re pa i r of defects in the objects
expressly warranted. In short, the extent and limitation
of the ri ghts and obligati on s are specifically expressed
in the warranty provision .
It follows t hat if the buyer has t he desire to add
in the pro pos ed warr nt pr ovis i on ot her ob jects to t he
group expre ss l y warranted , or if the
96
yer wishes to extend
the warranty period , or if the buyer seeks certain f eatures
in the correction procedure, it is necessary for the buyer
to obtain them nufacturer' s agreement to make such changes
in the expres s warranty clause prior to t he sale of the
machine tool. If such chan es are not made s part of the
express warranty claus e prior to the sale of the achine
tool, they can only become matters of future negotiation
between the buyer and the manufacturer and as such , often
cause delay in t he remedial ac t ion and additional expense
to both parties .
III . THE P OB EM I NVOLVED
The buyer's motive. The buyer is usually induce d to
purcha se a new machine tool in order to perform certain
work in a desired m anner. The de sired manner is usually
in terms of greater accuracy, finer tolerance, better
finish or greater production . As such , the machine tool
usually represent s t o the buyer the means to greater profit
and consequently , the buyer is s tisfied only with contin uous performance in the desired manner . nything short of
such performance is obvio sly unsatisfactory . ny threat
to continua s performance is a threat to profits.
The desire to make a profit colors the buyer ' s
ex ect tion in re ard to the performance of the chine
tool . The buyer is i cline o consider them chi e tool
97
not in terms of its complete ess or its proper functioning
in accordance with the manufacturer's designs and construc
tion, but rather in terms of the ability of the machine
tool to accomplish what the buyer requires in order to
satisfy his own and his customers' needs. As a result of
the buyer's expectations , it is sometimes the case that
the particular machine tool purchas ed was not designed by
the manufacture r t o do the work in them nner desired by
the buyer.
The profit motive also serve s to exhaust the buyer 's
patience with the manufacturer ' s correction procedure.
During the time that the machine tool is idle due to
returning t he defective art to the manufacturer 's plant ,
waiting for examination and for the return of the replace
ment or repaired part , it is not possible for work to be
performed in the desired manner . It is in such situations
that the buyer sometimes ignores the established correction
procedure and makes unauthorize d repairs on the machine
tool on the basis that time would not permit t e operation
of the established correction procedure. N hen the buyer
demands compensation for the expenses involved in such
unauthorized repairs, the manufacturer is usually reluctant
to honor such claims.
anufacturer ' s fears. The manuf cturer is nxious
to have the bu er purchas e a machine tool of sufficie t
capacity to provide continuous perfor ance in the desired
manner. rom pas t experience, the manufacturer has found
that buyers often purchase a machi e tool of insufficient
capacity in order to minimize the capital investment. As
a result, the machine tool is forced to operate above its
rated capacity, thereby causing premature breakdo sand
accelerated wear and te ar .
The manufacturer is also concerned with t he buyer
who, in addition to a consideration of the size of the
capital investment, also deliberately decides to purchase
a machine tool of insufficient capacity on the basis that
it will be i ntentionally operated beyond its desi ned
operating level. This kind of buyer expects more from
98
the manufacturer's product than it was designed to produce
and it is comm on in such situations for the machine tool
to break down prior to the end of the warr anty period .
Another buyer who causes concern is the one who
may or may not buy a ma chine tool of sufficient capacity,
but who al~o permi ts abuse or ne gligence i n its operation
whether knowingly or otherwise . This kind of treatment
usually re sults i n damage and the discovery of defects
t hat otherwise probably would not have appeared .
mong the uyers ho purchase achine tools of suf ficient c pacity are so e ho fai l to promptly no t ify the
manufact rer th ta defect has been discovered i order to
delay the time hen the machine t ool will stop operation
and production will cease. This continued operatio , in
spite of a known defect, often results in amage to other
parts that otherwise would not have been damaged .
99
All such fears on the part of the manufacturer cause
him to ·nsist on the right to inspect all defects in ma te
rial and workmanship in order to be satisfied that the
cause was a manufacturing error and not the re sult of
insufficient capacity, abuse , or negli gence. The manufac turer is cognizant of the inspection procedure in his plant
and consequently finds it difficult to realize that
manufacturing errors have been permitted to reach the
buyer. Therefore, the manufacturer has the tendency to
be suspicious as to the cause of the defect and ofte
imagines that the defect is the result of some error on
the part of the buyer rather than an error resulting from
the manufacturing procedure .
The real cause for all of these concerns on the
part of the manufacturer is t he additional cost involved
whenever the buyer makes a claim relative to a defect in
the objects expressly warranted . It is often necessary
for the manufacturer's representative in the field to visit
the buyer's plant in order to ascertain the nature of the
defect and to issue instructions relative to the removal
of t he defective part from the machine tool . It is neces sary for the manufacturer to maintain n i ventory of spare
p rt des eci lly those t my be expected of il
100
u der normal usa e. Te service organization must be
prepared to insect the defective parts, process the claim
and carry on he paper work necessary for such n opera tion. Each of the facets of the service operation involves
a cost in manpower an material that as to be estimated in
advance and provided for in the overall operations of the
manufacturer. If, through carelessnes in regard to the
processing of buyer claims, them nufacturer allows for
claims other than manuf cturing errors, the result will e
extraordinary costs th t may , in turn , wipe out the profits
made in the sale of the machine tools .
In addition to the cost involved , the manufacturer
is also concerned about possible damage to his reputation
and subsequent loss of business due to the complaints of
dissatisfie d buyers . It is essential that the correctio
procedure function smoothly in those situations where a
manufacturin defect has been discovered , and still be
alert to those situations that are not the manufacturer ' s
responsibility.
Communications difficulties . other of the problems
arising between manufacturer and uyer is the matter of
comm ications.
In most cases , the b yer id not urchase the
mac ine to 1 from t e man f ct re directly but r ther
from them f ct rer ' represe tative . i hile the terms
1 1
nd conditi s were of ered byte manu ctu r , the
per on 1 cot ct with t he buyer ade by the re resen-
tative. s a result, t he manufacturer is usually not
personally knovn by the buyer and in the event that a
defect i discovered i n the objects expressly warrante d ,
there is a feeling on t he buyer's part that the whole matter
is handled by persons who are usually far r em oved geogr aph ically and therefore , not as sympathetic m i g t otherwise
be expected . he b yer f eels th t t he correction procedure
will be time-consumin and t ha t profit s ill be l os t while
the machine tool i s idle due to the ins ection, repair nd
return of the re place ment or repaired p rt . This l a ck of
easy co munications N ith the m nuf cturer is often t he
re a so *y t e uyer procee ~ with repair~ tote achi ne
tool t hat h ve not be n previo 1 p rove d by t he
m nufa cturer .
In many c ses , them n facturer did not sell the
machine tool directly and a s result, knows the buyer only
throu h the local re presentative . r .hen t he buyer submi t s
a cl im for t rin err r in the ob ·ect s e pressly
w rranted , the manufacturer is usu 11 i nclined to tre a t
any p rticul r clai i n t he sam m nner a ~ 11 t e others .
The buyer ' ~ roblem of l oss o prod ction due to the
ma chi e tool ein i le , o ten ape r s to be a i mil r
pro lem to a y other u er 10 s r · 1ea a cl i m. Tee
102
is a tendency on the part of the manuf cturer to treat 11
such claims in a routine m nner because it is almost
impractical to give special attention to ea ch express
warranty claim.
In view of t he for egoi g , the buyer and the manufac turer in most cases appea r to be removed from one another
and often find it difficult to adequately express them selves to one another in those situations when the buye r
claims that there i s a defect i n mater i al or orkmanshi p .
lhere the manufacturer maintains a qualified field repre
sentative who can investigate the buyer's claim, or where
the manufacturer has sold machine tool s to a certain buyer
over a long period of time, t he manufacturer is inclined
to accept the buyer' s claim without making a s thorough an
investigation as in those cases where the buyer is filing
a claim for the first time . It follo1s that after the
buyer and the manufacturer have gone through the correction
procedure several times, there is a tendency for each
party to learn to appreciate the problems of the other
party and as a result, to make the correction procedure
operate with le ss delays and friction .
Defining quality . hen them n facturer or t he
manufacturer's representative pproa ch the potenti 1 buyer
of a machine tool, an ef ort is usually made to convince
t he potential buyer on the merits of the machine tool in
1
terms of its a ili ty t rod ce a certain injsh , withi
certain tolerance, or a cert in mber of u its within a
given time period . The ma f a cturer or t he re pre et tive
attempts to convince t he potenti 1 buyer tha t t his particu-
1 r ma chine tool can perform i n t he de sired manner, tha t it
ha be en built so as to give l ong life nd excell en t ser vice, that it is a ma chine tool of such quali t y t hat it i s
certai to s tisfy the buyer' s requi re m ent s . It is the
qua l ity of t hem cline to ol tha t gives he m nufact r er
pre sti ge tha t in turn , may be re lecte in the pric e o
the produc t .
~ Jhen the buyer approaches them nuf cturer or the
local representative , he _ lso is think·ng i te r s of a
chine t ool of su fi cient c pacity to perform the req ire
w ork s to tolerance, fi n i s , nd a certain number of units
to be produced within a give n period of time. he buyer i s
i ntereste d ot o ly i n the bility of the ma chine tool to
do the r equire d work in the desired manner , but als o in
t e performance of sue a s t andard f or an indefinite
period of ti rne .
1
· ince qu lit is repre sent tive of a s t cte of being ,
it would ppear that bo t h the man f ct ,er and the buyer
are m kin reference to quality d ring the negotiations
1
0tuart • Heinr itz , ur ch si g
tion ( e York : rentice - .all ,
rinciples and
n C • , 51 ) , p • 3 5 •
104
rior to the le o m chi e to ol . T e co o expre~
w rranty cl use t te th t or k n~ ip nd terial re
the object s expre ssly warr ted nd s such , thee ob ·ects
appear t o be the manuf cturer ' s expression of the ma chine
tool ' s quality. owever, to them nuf cturer, workmanship
and material are representative of quality in the sense
that such object s are t he tangible ingredients of the manu f acturer' s prod ct. ~ithi t he limits of the m nufacturer's
desi n and ability to produce , N or km nship nd material are
the collecte d componen s th t constitute q ality.
The buye r may not i n all cases perceive that quality,
as it is known to the manuf acturer, i s not the quality that
is require d to perform the require d work in t he desire d
manner. Because of his own expectations , t he buyer is
inclined to include certain fe ture s in hi s sense of qual ity that the manufacturer did not consider in the building
of t he machine to ol . . Jhen t he buyer prote~ts to t he
manufa cturer t ha t grinder doe s not pro uce certain
fi i i n micro i c e s , or th t a millin m chine doe s not
m c e a ur fa ce fit in ce t in ole nce s om one end
t anot er of it ~ moving table , or th ta 1 the does ot
produce a cert in thre d ithin required tolerance , it is
often the cas e t hat the buyer did not underst n th t the
p rtic 1 r chine tool purch sed was not uilt with the
k ·na of q lity eces ry to dot e required work int e
esired m nner .
1 5
ince it is the quality o the ma chine tool in terms
of its ability to perform in accord nee with the buyer's
requirements that is sought in the purchase of a machine
tool, it is sometimes the case that the buyer loses confi dence in the quality of them chine tool bee use it will
not so perform. The buyer i incline d to interp et fre e dom
from def ect~ in material and workmanshi p s the necess ry
quality . a re ult , lthough quality i the ingredient
to be sold by the manufacturer and purchased by the buyer ,
there appear s to be a difference between the buyer nd the
manufacturer as to what constitutes quality .
The buying negotiation . lthough the decision to
purchase a machine tool may require a considerable period
of deliberation , it is u~ually the case tha t once the
decision has been made , them tter has be come urgent. There
is in most c ses a desire to secure the machine tool as
soon as practicable and in turn, there is a wish to complete
the buying negotiation as expeditiou ly s possible . In
the rush to m ke the purch e , the tter o the express
~arr nty my
.
e give on .ttention nd m e
su j gate to the immedi te concern of pl~cing the order
with them nufacturer .
Them n f cturer's representative is even more
anxious th n the buyer to complete the purchase negotiation
and to pl ace the machine tool on the manufacturer ' s order
106
board. The representative has probably spent considerable
time and effort in the attempt to sell the buyer on the
quality of this particular machine tool. The eagerness
on the part of the seller to complete the buying negotia
tion again serves to rele gate the matter of the express
warranty to a subordinate positione In most cases , the
express warranty clause is buried in the fine print of the
manufacturer ' s printed standard terms and conditions. In
many cases, unless the buyer asks about the express war ranty, there is no mention ma de by the manufacturer' s
representative as to its content.
s a result, there is a tendency on the part of both
the buyer and the manufacturer' s representative to overlook
or pass over lightly, the matter of the importance of the
express warranty clause in the buying negotiation . By
conveying the warranty t o the buyer by m eans of the small
print of the manufacturer ' s standard terms and conditions ,
it remains for the buyer to read , understand and take issue
with any of the portions of the express warranty that are
not acceptable .
1
fuen the buyer does not choose to give
consideration to the express warranty i n the buying nego tiation, it is usually neglecte d until such time as a
defect is discovere d .
In such cases where the matter of the expres
warranty is overlooke ntil a defect is discovered, it
usually follows that both the buyer an the man f cturer
have made various assumptions relative to proced re or
conditions or prohibitive acts that inevitably lead to
claims and counterclaims. It is possible that the cost
107
of prolonged ne gotiations relative to the settling of such
claims might exceed the cost of correcting the defect. It
would appear that in order to eliminate such situations,
the buyer and the manufacturer should establish procedure
for the correction of defect s in the express warranty
clause during the buying negotiation .
IV. ·u ARY ON COMPO ITIO , BA IC
iD P OBLEMS
Composition. The common express warranty clause is
made up of five major components, which are (1) the objects
expressly warranted , (2) the express arranty perioa ,
inc~uding the starting date and the length of such period,
(3) the manufacturer ' s conditions, (4) the manufacturer ' s
prohibitions, and (5) the established correction procedure .
There are many way s of expressing each of these major c om ponents but it i s necessary to inclu e each one in some
form because of its importance to both the buyer and the
manufacturer .
Basic assumptions . Both the manufacturer an buyer ,
as parties to thee press warranty cla se for machine
tool, have cert in rig ts, obiigations and privile ges.
108
ome of these are c~early stated i the wording of the
express warranty clause, whereas others are assumed to exist
between the parties to such a clause. It is a matter of
importance to both the manufacturer and the buyer that such
matters are clearly understood by both p rtie s to the
express warranty clause.
Problems. The establishment and the operation of
the express warranty clauseencompass several proble ms , such
as (1) the effect of the buyer's desire to make profits
through the us e of the ma chine tool on such matters as
performance and the correction procedure; (2) the fears of
the manufacturer concerning the procurement of sufficient
capacity, the negligent operation of the machine tool in
the buyer's plant, the delay in notifi cation that a defec t
has been discovered, the deliberate abus e of the machine
tool by the buyer or his opera t or , and the cost involved
in the operation and maintenance of the correction proce
dure; (3) t he diffi culty involved in the matter of communi cation s and the f eeling of rapport between the buyer and
the manufacturer; (4) the differences in thinking between
the buyer and the manufacturer concerning the m eaning of
quality; and (5) the tendency of both parties to overlook
the matter of t he expre ss warr anty provision due to the
desire of both parties to conclude the uyin negotiati on
as qui ckly s po sible .
C H PTE VII
REVIE OF TY IC L CLUE
In the preceding chapters, the construction and
meaning of the express warranty clause that are offered
by the 142 machine tool manufacturers of the survey have
been considered, together with the problems involved in
securing satisfaction for both the buyer and the manufac
turer or seller under such warrantles. In this chapter,
the preceding analysis will be applied to situations call
ing for appraisal of the standard express warranty clauses
offered by manufacturers of the same type of machine tool.
The clauses to be considered are reproduced in their
entirety in Appendix C.
In the buying negotiation, the industrial purchasing
agent, or the owner himself, depending on the size of the
enterprise, issues an invitation to bid to the appropriate
machine tool manufacturers. The sales representatives of
the manufacturers respond to these inquiries by the pre
paratio , in concert with their anufacturers, of a proposal
containing specifications , pricing , terms, conditions , and
standard expres s warranty clauses.
The appraisal in this chapter will concern itself
specifically with (1) examining some stand rd e pre s
warr anty clauses; (2) establishing an approach which will
expo~e deficie cies in tandard arranty cl uses; nd
110
(3) illustrating a pertinent procedure between a buyer
and a seller.
The problem involved is not one of establishing
which clause is most advant ageous to the buyer, but rather
it is one of examining express warrant y clauses in order to
determine what provisions are missing that should be
included, and what are included that should be modifie d
or eliminated. It is important to note that the express
warranty clause finally incorporated into the purchase
contract is the product of ne gotiation between the buyer
and the seller. The express warranty claus e is one of the
principle subjects for ne gotiation ; therefore , it i s
important that the buyer of machi ne tools be aware of the
construction and m eaning of various expres s warranty
clauses.
I. WORDI NG OF TYPICAL CL SE
General approach. This examination of warranty
clause wording will consider in turn each of the maj or
divisions of the standard warranty clause that have been
previously designated in this paper.
The objects expressl y warranted. Table XI is closes
the marked similarity between clauses now in use by differ ent manufacturers relative to the ob ·ect s expressly
warr anted .
111
TA XI
DIG OF TY I CL U , T HE OB
NTED , M TE I 1
N HIP
CT
M anufacturer's
1 umber
317 . . .
319
• • •
321
• • •
322 . . .
EX P
D
Jording from ·arranty Clause
Jith respect to any good s covered by tis
order m nufactured by ____ (the manufac -
turer), ____ (the manufacturer) warrants
the same to be free from defects in material
and workmanshi .
the manufacturer will gu rantee
machine tools of it manuf cture to e free
from efective teri 1 d var nshi .
___ (t e anuf cturer wq_rr n s theequi prrent
so f ar as the s m e is of its Oin m nuf cture,
a ain t defects in material and workm
1 e the manufacturer warr nt to you , t he
buyer) ... the te ach item will have been
constructed in accord nee with the specifi cations set forth or incorporated by refer
ence in this proposal -nd ill on date of
shipment be free from defects in materials
and v1orkmanship
Them tter and m nner o con truction re the elements o
ateria l nd workman~hi p 1hich 11 m chine tool
manufacturers seem willing t o guarantee .
1
Concerni g components , ccessories, an electrical
equipment tha t re anufact red by various supplier s , the
clause s have a eneral likene sin their r eluctance to
include suc h items ~ithin the elements of m teri 1 nd
orkm sip or to u r ntee s c items beyo d the o igin 1
1
•
te p . 17 .
manufacturer ' s
2
arrc:nty .
1 2
ordi g rel tive to
components · s how in a le ' II .
T B E . I
, ODIN ·F TY I
E RE , LY T\
C U oE , TH.tt
TED , CO
Y -jUP
EJEC T
T
anufact rer ' s
umber
317 . . .
319 . . .
20 . .
32
• • •
}1 JU CT
,
1
ording r o ra r anty C a se
ill p r -sed ite ms il be
O
ar nt d l y
insofa r sand to the extent th t t he manu f acturer o these items guar ntees them to
[the manuf ctur r ] .
ny co ponent not of ___ tthe manufac -
t rer ' s ] , n manufacture is old m1der such
w rranty only as the makers thereof give
( t e m uf ct rer 1 , d __ {the
manufactu e ] is a le to enforce, but suc
1
c omponent part is not gua r nteed by
( t l e m nuf cturer) in any way .
ny articles not four (the manuf cture r ' s ]
ow n nufa cture incl ude int is pro os 1
e sol u der sue w r a t n s the
ake r iv e s , [ e ma uf cturer ) , nd we ,
(the ma ct rer] are e ab ed to e for ce ,
ut su ch art·c e s r e nt tee d b us
( the manufa cturer] in any v y .
quipment and acce ssorie s not man actured
by ___ [the manufacturer ] are guarantee d
only to t h extent of the origin 1 man fa c
ture ' s w rranty .
The paten i demnifica tion ortion of the exp e s s
war anty clause recognize t e principle that the party
r sp nsible o the design houl 1ake the paten t
2
r,f . ant p . 27 .
infringemen t cl r ance . 3 T e
113
tent ection oft e l ause
of anuf cturer rumb e r 319 is an example of a cceptance of
such a princi le:
[the manufacturer] will defend , protect and
save customer ha r mle ss from and ain t any loss or
e pen e incident t ny c a i m ed ·nfring eme t of any
patent of t he nited t te s i sin o t of the pur h se,
sale or u e of ma chi ne tool designed and manufactured
by ___ [ t he anufacturer], provided cus tom er shall
give ___ [the manufacturer] prompt notice of ny such
cla in of infringem ent and co plete uthority in defend ing against it. Customer Nill defend , protect and save
[the manufacturer ) harmless from and against any
loss or expense incident to any claimed infringement
of any patent of the United tates arising out of the
manufacture or sale of machine to ols or any parts
thereof hich are built by ___ (the manufacturer ]
in accordance with designs furnishe d by the customer .
The warranty period . ,vhile there is no t full gree m ent s to the de ignation of t he s t arting da t e or the
len th of the period , Table XIII on pa e 114 shows a
sampling of excerpts from express warranty clauses relative
to the period of the warranty .
4
ince it has been concluded that the purpose of the
express warrant y period i s to discover defects , the accep
t bility of any of t he excerpts shown in Table III would
depend upon the parti cular circums t ances involved when
considered on the basis of past experience.
3
,,f.. a te p . 29 .
4r, . nte pp . 36 and 47 .
JO
cturer ' c::
be r
32
66
126
317
319
321
322
T BL X I
r : or ding nty Claus e
... within t elve months after being
placed in co mmercial operation ....
. . . withi n twelve mont hs fr om date of
original shipment ..•.
. . . for a pe r i od of six m on t hs from
deli very . . . .
114
This guarantee will cover a period of 12
months after t he i nstallation of t he m achine
with t he under s t andi ng t ha t we [the manufa c turer] would be not i ied i mmediately when
this m a chine is i ns t alled .
..• for a period of one ye a r from
deliver ....
•.. for a period of six m onths from
date of deliver ....
•.• for a period of six m onths from
date of shipmen t fr om the f actory ••..
... f or one yea r after date of shi pment
from ( t he manufacturer ' s] f actories .
... for a m ax imum peri od of one year from
date of invoice ....
Expres s warranty conditions . any expre ss war ranty
clauses include certain cond i t i ons t ha t are imposed by t he
manufacturer on the buyer .
5
Instance s of t hi s practice
should be discerned by t he buyer because such conditions
may serve to limit t he operation and subsequent sale of the
machine tool. Table I V prese t s t he wor ding from variou s
express warranty cl use s relative t o the principal
conditi ons .
5
cr . ante . 55.
t~ larranty
Condition
Normal
and
proper
usage
O wned by
•
•
•
BL IV
ORDI G OF TYPIC L C U E
l A N TY C O DITIO
1fr '
115
• Number Jording From 1arranty Clause
•
•
•
•
•
•
•
•
•
•
•
317
• • •
under ordinary and normal use
and service
_____ ......,;.____,.....;...;;;.____,~;;..;;....-- -----------
319 • • •
------------w ..... h ;;..,_,,;..e ..... n~g i.- i ;,_,,v.....;;e;...;. n ;;;;;.....;;. n __ o __ r ~ m - a..;..;..l ;.__..;.;. a ;;.;;; n~ d_.. p ....;;;;. r...;; o ... p .....;; e ;...,;; r ___,; u ;..;_s ~ g .... e ,.;;._
• •
321
•
when used und e r no r mal conditions _____________ ...........;...__,;......;;....;.;;........;;.;.____,_...,_.___,,;.,..;;.....;;....;.._.;,;.;;;;.__;;;;,.,.;;..;;..;;;..;~~;;...;.;;;..--
322
• •
317
• •
•
•
under normal use and se rvi ce
the obliga t ion under the warranty
being limited to supplying the
buyer
or iginal :
319
• • •
w hen owned by the original
purchaser
buyer
Prompt
notifi cation
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
21
• • •
when used b the urchas er
--------------~----...;;._......,_...,.__,_;;...;....;;;__.___,;..~......,........;._;-----
322
• •
72
• •
171
• •
•
•
•
~ ~ 1 e the manufacturer warrant to
you (the buyer }, only .•• •
The company shall be given written
noti ce of such alleged def ect
providing t he purchaser gi ve s us
[ the manufacturer ] immediate
written notification of the dis -
: ______ _ _ c .;;..;.. ov ____ e __ r ..... Y _ o...;;f _ s ..... u _c ;;... h ..;.._d _e _____ f __ e __ c_ t _ s ______ _
•
•
321 ••. provided the Purchaser has given
of defec t : f the manufacturer J immedi ate
written notice upon discovery of
•
•
: such defect .
__ 3_ 2 _ 2 - .- .- _ - o _ u_r ___ ( __ t _h _e ___ m_a_n_u_ f_a_c_t_ u _ r_e_ r_' _ s_ ) ~ o -b _l _i _ · g_a _t _ i_ o _ n_ s
•
•
•
•
•
•
•
•
•
•
•
•
•
under our warranties are condi tioned upon our re ce i ving your
[ t he buyer ' s ) written notice of
ny cl aimed defect or deviation
from specifications promptly •
Express warranty prohibitions. sin the matter
of conditions , many machine tool m nufacturers specifically
prohibit buyer s from ccu ulating char ges fo r d ma es,
r epairs and othe r expense s t hat might be incurred fter
116
them chine tool has be n delivered to the buyer ' s plant .
6
Table V shows i lustrations of such prohi itions .
Jarranty
Prohibition
Costs of
damages
cannot be
charged
to the
m nufac -
turer
Costs of
unauthor-
ized
repairs
cannot be
charged
to the
manufac -
turer
T BL~ V
~ vOR I G OF TYPICAL CLA "'E , E RE
•
•
fr ' s
•
•
•
umber
•
317 • •
•
•
•
•
•
•
•
•
•
319 • •
•
•
•
•
•
•
•
•
•
•
•
•
•
321
• •
•
•
•
•
•
319 •
•
•
•
•
•
•
•
•
•
•
•
•
•
322
• •
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
R NTY PROHIBITIO
•
•
•
•
•
Jording From ~arranty Clause
[ the manufacturer ] will , in
no event, be liable for damages
and/or injuries which may be
incurred by the buyer , its gents
and / or employees .
(the manufacturer J shall
not be liable for indirect or con sequential damages , losses or
expenses arising in connection
with the use of , or inability to
use , its ma chine tools for any
ur ose whatsoever .
[ the manufacturer shall i n
no event be liable for consequen tial ors ecial dama es .
( the manufacturer will not
accept any charges for work per formed by distributor or customer
in making adjustments to machine
tools unless such work has been
authorized in writing by
( the manufacturer).
o allowance will be made for
repairs or alterations except
pursuant to our written agreement·
[ the manufacturer] shall
not be responsible for work done,
material furnished or repairs
made by others .
60 6
~., . ante p. .
117
Correction procedure . In spite of the i mport nee of
correction of any defects that might be dis covere , only
abou t half of the ma chine tool anuf acturer s of the survey
chose to establish a definite correction procedure.
7
Table
VI hows a sampling of the various elements of ~tand rd
correction procedures. ( ,ee page 118 . )
Conclusion on wording . The precedi ng exami nation of
the wording of express warranty clauses has considere d the
standard claus e s in terms of their major divisions, namely ,
(1 ) the objects, (2) the period , (3) the conditions,
(4 ) the prohibitions , nd (5) the c orrection procedure .
W ithin each of these divisions , it is apparent that there
is a definite similarity in content and wording . The pro
cess of setting aside the various divisions of expre ss
warranty clauses demonstrates that (1) it is possible to
s epa r ate the clauses of the machine tool manuf acturer s into
t he five major divisions; ( 2) after segregating the clauses
into divisions , com arison of one clause or part of a
clause with another is greatly f cilitated; and (3) the
comparison of clause segments permits faster and more
thorough analysis than by consi eration of the clause
as a whole .
7
j • a t p . 73 .
118
TAB E
10 D I NG OF TYPIC AL C
w R NTY C ORREC TIO
VI
U' E
' ROC EDU
Elem en t of
Correc t i on
Pr ocedure
•
•
•
D ef ective
•
•
par t
•
lS
•
•
subjec t
•
•
to manu-
•
•
facturer'
•
•
•
1nspe c-
•
•
tion
•
•
•
•
•
•
•
•
Defecti ve
•
•
part mus t :
be
•
•
retur ned
•
•
t o the
•
•
m anufac -
•
•
ture r ' s
•
•
plant ,
•
•
f re i ght
•
•
prepaid
•
•
•
•
•
•
•
•
•
•
~ub ject to
•
•
•
exami
•
•
•
ion ,
•
•
defec
•
lVe:
part
•
•
will be
•
•
repl ed
•
•
r
•
•
.
re d re
•
•
t the
•
•
m n -
•
•
urer '
•
•
1 t
•
•
•
f r' s
N umber
319
• •
321
• •
322
• •
317
• •
321
• •
322
• •
7 • •
37
• •
61
• •
•
•
•
•
•
•
•
•
•
Jording From arranty Clause
During the guarantee period , parts
found defec t i ve by inspe ction by
the manuf a cturer
[t he manufacturer shall also
have the option of requiring the
return of the def ective ma t erial
t o e s t ablish the cla i m . . .
any item or part thereof whi ch
proves upon our inspection not
to have been as warrante d • .
the oblieation nder the · rr nty
being li ite d to supplyin , the
buyer , . O.B. __ ( t em n f a c turer ' s 1 l ants . ..
[ the manuf cturer ' s obliga tio under this warranty may , at
its option , be discharged by fur nishing or repairing , without
charre , f . o . b . its factory .
Our t he manuf acture r ' s ] obliga tions under our warrant i e s .. .
are limited to repairing or
re pl acing , F . O.B. our works or
othe r point of shipment .
nd found defective , .. . will be
repaired or re pl c a , . o . b .
f c ory .
Parts claimed and proved to the
company ' s [ the manufacturer ' s ]
satisfaction o be defective , shall
be re placed without charge, F . O.B.
the comp ny ' s factory .
: i thin which time the material
proved defecti e , after opportunity
for ex min t · on s been given to
he ___ (manuf cturer) , rill be
replaced ithout c ar ge , f . o . b .
.... hi pin poi t .
Eleme t of
Correct·on
rocedure
Defective
part
will be
replaced
free of
charge
•
I
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
T
fr '
N umber
119
l or ing rom J rranty Clause
66 . .. .
1
e [ the manuf acturer ] will furnish
free - of- char e ... an arts .
93 . . . we the manuf ct rer gree to
replace free of ch rge .
321 . .. by f urni hing or ith-
o t ch re, . . . similar part
to re pl ce ny of its on .nufac -
ture hich , . . . proves t o h ve
been defect ive ... .
120
II. FOC USI NG ON DEFICIENCIE
__ e second tep. 0 ce the uy r i f miliar with
the organizatio of the standard express w rranty cl use
an i s able to i ol te each of it s ive ma ·or divisions ,
he mus t net be pre are d to perceive ny e iciencie tha t
may exist therei . hi s is t e next import t ste p in the
pprais 1 oft e e pres .... warranty clause . aving show
excerpt ..... of s tisf ctory claus e s der e ch of the ma or
divisions of t he expres s w rr ty cl us e , thee sa e
divi ions ill no be u se d as rame or for a sampl ing
of defi cient cl e ..... .
· he o .ject ..... expressly I certain objects
are to be warrante d a gainst defects, such o jects m ust be
specifie d int e express w rrant y claus e . Ith s be en
concluded from the urv ey t ha t achine tool manufact rers
are illing to gua r antee the matter and manne r of J ich
machine tools are built, that
.
t teria l and work is , e m
.
r equired
.
t t ti on t
.
t 1 . ..... l p i n e 0 e
m (.
i ne
.
t ool s 18 e r
m,c i ne epts exn r
...
dorr nt
1 us e t t doe
" .(:'
tl e
0 ,
.
t rranted , 0
..... 1J e
i.1. e
" l;J e
...
m st re alize t t t ere woul d e n 0 po t nity t 1 t er
te or dis ut tion resultin from t int ret tion a d
1 ci
ic · t
.
t
•
of cl use .
0 p in e e
_ in
a
121
Tab l.e , VII sho s
def icient bee u e of hei
sam lin o cl u e s t t
bi ity re l t ive t
ob ject ~ being specific lly ~r r te .
B
vO 1 NG 0
I ' TH O B CTS
~ T ,D
anufa cturer ' s
m e \or i
• • •
. i.ll m c i n
c: e ,.
...., C
r tee g i
• • •
e
e
e .
23 5 . . . e ua r antee r ts o ou chi nes
gainst defective pert s ...
270 .
• •
ny p rt or p rt s ... ~hich , .. .
shall prove to h ve been defective .. .
271 . . .
273 .
• •
The portio 0
t he mselves ~ .it
uch
•
.
~ or
in l S
It is guar ntee d a a i ~t Jechanical
and electric 1 defect s .
~e ... ~ill make odor re pl ce . . .
ny defect s or defectiv e part s there i .
t he cl sho
.
T bl e
~
II u ~e s n in concern
the rranting of
"
f ective ts .
I
prob bly t l t of
.
ur ate re p
e re s n C r
-
tion of the expres s war r a t y clcuse r t he r t h n an expre s-
.
of
.
0 .l'l
t l'le
b ·e t •1arr n ted t e p r .... ion ·J' l e r
....., c pe 0
of the m an f act er .
t been ~o i nte o t in he survey th t ve f e
man f ct· rers co e o enti o pe or n e i t eir w r -
r nty cl u se . T · s i true i n spite of the ct t t the
ye of .a c ine t ool
si of se ur · n
all s ch equipm ton t he
ore e icient piece o pr oductio
122
m chi ery i term s of ice sed nit od c ·o . T le
XVIII sho t he lind o re triction · po e m u cturers
rel tive t o hem t
v1 nufact re ' s
u 11 er
33 .
• •
• • •
52 . . .
322 . • •
T VIII
~ording rom : rr nty Cl e
~fuere pr o uction figures are given , it is
understood tha t they are e sti ates only nd
b sed u~on our un erst ndi of the req ire -
m ents , teri 1 , volume , co ition o the
m terial sit com es to the m a chi ne , loc t ing oints , nd ndlinb facil i ties rovided,
as st ted i thi s ro o 1 .
1
!,lhere production fi gures are given , it is
understood tha t the y re estimate only and
based on our underst nding o the limits of
ccuracy and fi ish required , machineability
of t he ma te r i 1 , amount of material to be
remove d , handling f cilities provide , and
t he loc tin points as state d in e ch
individu 1 ite . of this proposa l , and sub ·ec t
to the cuttinb t oo s f urnis ed by ustom er .
~tim te d roduction i g re , ... are
baced on or owledge of the wor k to be
erfor ied a ~ utline d in thi s pr oposal nd
u der the conditi ons outline here · n . ny
change i the or t o be perfo r ed or t he
con ion s s outlined ill , of course ,
require a confir n tion or rev i s i on of t he
estimat ed production fig res .
nless pecific lly de in te d s warr nties,
ny reference t o production c p citie s •..
of n · tern re esti a t d nd not pecifica ti o s or warr nt · e .
i ~ a p~ r e t ro. the sam 1· ng ho vn i T ble ; I t h t
C
e t ool nuf tu e 'Yl'"' e co c re 1i ht e v r · b e -
123
i valved i the chieve rnent of any p r t icul r roduc ion
level. However , the buyer is bein misled if he depends
upon certain prod ction fi gure s at t he time of urch se ,
only to discover t a later date tha t su ch fi gures were the
optimistic estimate of the manufacturer or the seller. The
buyer must as s m e the res on~i ility for the establishment
of such informa t ion as may be required by the manufacturer
in order to compute definite perform nee fi gure for the
pr oduction of the machi e t ool . It is true th t such a
reckonin my be po ible onl y \ en them chine to ol i s to
e u e f o c eci 1 purpose jo . Ho ever , the perfor-
m nee uar tee i s e initely v· t ·n he re n po i ili
and t e buyer, instead of cceptin clauses as shown in
Table III, mu s t tte mp t to eliminate t he variables so
that the manuf ac t urer will be able to guarantee performance
in terms of a definite production level.
The survey has shown that manuf acturers are reluc
tant to guarantee beyond the original manufacturer 's
warranty such items as components, accessories, and elec
tri cal equi pment . The ma chi ne tool manufacturer's position
i n this matte r has been justified . However, the buyer
should ascertain whi ch party--the machine tool manufacturer
or the buyer--is responsible for t he enforcement of the
arranty offere d by the supplier of the component ,
ccessory or electrica l appa r t us . The enforcing of the
supplier ' s rr nty shoul d beam tter to be dertaken
by t he ma chine tool manufacturer on the b sis of the
complexities involved for the buyer in att empting to
implement the manufacturer ' s contract with t he supplier .
124
The express warranty period. In specifying t e
starting date and the length o the express warranty period ,
the manufacturer is establishing a period of time dur ·ng
which he is willing to correct defect in the objects
expressly warranted . It is essentia l that the period be
definitely establishe d in order to avoid any ensuing con troversy relative to the dis covery of the defect within the
warranty period . Table I shows some examples of arranty
periods with indefinite startin dates .
anufacturer's
N umber
45 . . .
66 . . .
202 .
• •
322 .
• •
TABLE X IX
wORDING OF DEFICIE T CLAUSES,
THE EXP
0
.1 RRANTY PERIOD
I DE I N ITE STARTING D TES
1
ording From arranty Clause
for a period of ix months from delivery
This guarantee rill cover a peri od of 12
months after the installation of the
rn cine with the unde standing that we
wold be notified immediately when this
ma chine is installed .
for period of one year rom date of
sale .
for period of one year from date of
invoice .
The d y of delivery , of install tion, of purch se , a of
invoice are 11 if icul d tes to asc rtai . uch d tes
125
require investig ons of v rio s compa y records and
afford opport11ni ties for a r ument tion between the man -
actu er and the buyer . t follows that the buyer of the
machine tool m st bar ain for a warranty period th tis
s o precisely desi nated that both t he manufacturer and the
buyer clearly understand the startin date and the length
of the period .
Express warranty conditions . The survey has found
that many ma ufacturers impose conditions relative to the
usage and ownership of the machine tool , as well as prompt
notification of any defect that might be discovered . In
additi on to t he fore going , other manufacturers also impose
the condition of operation on a one- shift basis, as is
shown in Table XX .
J\larranty
•
•
Condition
•
•
•
•
•
Used 0
•
•
eight -
•
•
hour
•
.
shift
•
•
•
•
•
•
•
•
•
/ JO RDI
E PRE
0
fr's
1 umber
22
• •
52
• •
213
• •
280
• •
•
•
•
•
TAB E XX
OF D I CIE T CL USES ,
WARR Y C NDITI S ,
HIFT OPERATI ON
/ .Jording From
1
. arranty Cl aus e
provided equipment
.
base lS on
eight - hour per day basis
r hen
s e
• • •
on single
shift .
.
•
.
used ssumin equipmen s on a
eight hour per day basis .
rovided
•
ment
•
used equi lS on
eight ho d y b
•
r er Sl
•
an
n
126
The r estriction of one- shift operation of a machine tool
may r esult in a detriment to the buyer , especially if the
buyer generally operates his factory on a multiple shift
bas i s . As a result , the buyer should seek clarification
f r om t he manufacturer as to the effect of such a condition
on t he l ength of the warranty period in the event that the
machine tool would be used more than eight hours per day .
If t he manufacturer sought to reduce the length of the
wa r ranty period in the event of multiple shift operation of
t he ma chine tool , it would behoove the buyer to bargain for
a l onger express warranty period .
Correc t i on procedure . In order to insure the prompt
replacem ent or repair of any defect in material or workman shi p , it is necessary for the buyer to insist that the
war ran t y clause include an established and satisfactory
corr ection procedure . Such a correction procedure should
be complete in tha t it contains the five elements set up
in the survey .
Conclusion on deficiencies.
-
tis the buyer ' s
res pon i ility t o de tect int e exp ess
rr nty cl u e any
deficie C t t ma y r e ul t
.
disa l a V n t ge tote uyer .
e y m s t n 1 ze the deficie n t po tions oft e clause
so th e m ay be le to prope ly provide t he ne ce ssa r
i n or tion re uired for t e dele t ion , ddi
.
adjust- ion or
.
the
.
In order to t ke so e of the
m en l wor i
•
127
guesswork out of such a review of st ndard express warr nty
clauses , it is possible to create a checkli s t for such
purpose similar to the one produced in ppendix D. ~ith
such a tool for reviewing clauses , the buyer can perform
the checking function in a routine f shion .
The foregoing deficiencies are the m ore evident o es
t h t 1 oul e . n cce t le to . o t buy rs . It is i portant
to note th t ea c pu ch e of cine tool involves p r -
ticul r ci rcumst nce s that may have the effect of reve aling
other deficiencies . o particular warranty clause can
cover all of the sales of machine tools . This conclusion
is also true of any specific group of deficiencies . Each
situation m ust be appr aised and the expre ss warranty clause
adjusted a~ deemed appro priate to bo t h the man facturer nd
tJ. e buyer .
try i
t e
The buyer' s appro ch .
for the requirem ent
T_ e common pr acti ce i n ind s or a ma chine to ol to r · ~e in
ro
r e p re d
c a'"' e t
ction depa r ient , fort specif i c tion t o
teen i neering de art ent , ad for t he pur e made by t he pur chasing department . I any
c se s , the b yer forwards t he specifi ca t ions t o ro spective
m n f ct rers or ~ellers immedi tely wi t hout t akin the
ime to i nvesti t cert in m tters rel tive to the ~e of
t he c ine to ol . In ore forte buyer to dis cuss t he
128
electrical a cces ories to be w arranted, e must h ve o e
knowledge of the ta dard warr nties and co rection roce -
d
. , d
ures invo.J..ve . n order for the buyer to consider the
matte of performance , he mus t know ~omething of the planned
operation of the m chi e tool in the pl t . In order for
the uyer to brain on the atter o t e w rranty peri od ,
he must be informed of t he estimated t · m e required or
tr nit , · n t 11 tion , om ere · 1 o er t i on , n or t he
discovery of e et . In order for the buyer to discuss
the manufacturer ' s sin
0
le hif t r estriction , he mu~ t have
available the production require ents o t e product to be
run on the a chine to ol .
T eed for i nfor tion . It is ppare t t h t t e buye r ,
in order to be properl qual i fied to make the purcha se of a
ma chine tool, must kno t he ans es s to ifhere , w he , why ,
and ho t e a chine t ool i t o e u C!e d . · ._ os t of this
i nform ti on c n e se cure d ithi he b ye r ' s own us i ness
or niz ti on , al ho gh t ti e , it might be necess r y to
secure t e i nfor mation rom ot er org iz t io s us i n the
s m e or i il eq i p ent .
of
. .
e f t nd
.
res r elative
s e i n ion . lg
to the of t
.
tool pre p the uyer no t on.Ly
us e e ma c l re
forte ol "cit t io of bids n t 0 p rison of ids
fter t ey re rece·ved , b t l .... o f or the n ce s r
pr s 0 t e r t cl u e 0 red e uc ce s 1
12
bidder. fter the machine tool of cert in m nuf cture
has been elected f or purch se , the buyer make s a thorough
review of the terms and conditions included in the manufac
turer's or seller' s proposal. Each of the terms and con
ditions are examined i n the light o the information
previously ga there on the use of th machine tool . This
process is likewise pplied to the manufacturer's express
warranty clause. The buyer sho1ld se parate the clause into
the five major divisions established by the survey, and
decision should be made relative to the unacceptability of
any portion or portions of the clause. By whatever m eans
deemed necessary, the buyer should prepare himself to take
exception to those parts of the express warranty claus e
that appear to be unsatisfactory .
Challenging the clause. It should be recognized by
both the manufacturer and the buyer that the express war
ranty clause is a matter tha t is subject to negotiation.
However, it is t he bu er's responsibility to challenge any
portion of the varranty clause, along with any of the other
terms and conditi ons , tha t does not satisfy his require
ments. It does not necessarily follow t h t all of the
buyer's dem nd c n be satisfied . In spite of the years
of experience behind many of t he express w arranty clauses,
it is diffic lt to pre pare one tha t will cover all situa tions. The knowle ge of the sit ation and of the fut re
13
use oft e m chine tool , under s oo by the er ,
emands th t e i iti et e de an or c nges in the
expre s r ant clue an co titutes the b is for
ne oti tion .
The rior t o the ctual p r -
c se of the ma c i ne t ol , t e uyer m eets with the m nu facturer or selle- for the pur ose of i nfor ning them of
tho e portion of the pr opo 1th t are ccept ble n
those portions that are not a cce p le . Bee u e of 1 ving
previou ly obtaine the ecessa y infor ation s to the
use of the achine tool , the buyer is le to expl in t he
reasons fore ch request for deletion, addition , or change .
The seller ' · s a result of sue a con-
ference , the ma f cturer or seller will ansver the buyer's
de ans on the b sis oft e rea ~o s behind such dem nds an
i the lig t oft em nuf cturer ' s past experience . 0
m atters of a tech. ica l or le g 1 nature , it my be nece ~s ry
to sec et e s~ver fro t e f actory .
Iut ual ent. I t
.
gree lS b the proces s of e oti
t · on t t t e
, u e
nn the u t e 0 seller re ch a
u t u 1 ree e t 0 all of the V rious uns tisf ctory
a pect s 0 e pr ss wa r nt C a
sec: , s well a s the other
te co
dit · ons . he uyer, co firm ti on of the
.
che next r epare~ ritte pu ch se order
r gain e
'
or cont r ct , cont in · g 11 oft e ec i f i cr tio , ter
and conditi ns , i nclu i n t e express rr nty clue .
131
lhen the buyer ' s urcha se order is cce te d by the m anufac turer or selle r , it bec omes the r uling document or contract
between the two partie s .
IV . CO CLU IO
Search for qu lity . In t he pro curement of machine
tools, the buyer relies upon the express warr nty clause as
a method of ssuring a certain quality. This quality is
expressed in terms of t he objects expressly warr nted , for
a definite period of tim e , ~ub ject to conditi ons and pro hibitions , and nder t e promis e of a e inite correcti n
r ace d r e . ec us e each m ._ chine t ool nufacture r as
pre p 4re hi ~ n w rr n y cl u-e , i t i- i f ic l t f or the
buyer t o know whether or not any particul a r cl u e offers
t he desired q ality. In order to find an an swe r to such a
quest i on , t he prec eding chapters n ertoo r t o nalyze the
construction and m eaning of standard expre s s wa r r anty
clauses bv delinea t ing the · r gener _ l or anization , to ether
with an explanation a s to t he effect of variations within
ea ch oft e m ajor divi i on on both the buyer and the
manuf cturer.
Using the t ool . hi s ch pter h s sought to turn the
an lysis i t o t ool t o be se y t he buyer i n t he
132
appraisal of ny particul r ro p of clauses. ased pon
the re onine o t he b ~ic stud a d s vey , 1 r ge nu er
of arr nty clues re revie ed , ome t o s 0 1 their c n formity vith wh th s been de em ed as acceptable, and others
to show their deficiencies. The appraisal of the express
warranty clause uses the preceding analysis as a tool by
means of the appli cation of the process of se gmentation
into the five major divisions .
Limitations. The appraisal of the express warranty
clause is not an exact science . It depends upon the buyer' s
ability to recognize the orb nization of any particula r
clause, and ny deficiency tha t may be present in any par
ticular division . I t depend upon the buyer ' s i niti tive
to challen e any eficiency nd to dem and the nece ssa r y
diti ons , deleti on n ch n e . t epend s upo t e
buyer' ow e ge o t t 1e m chine to ~Ji 1 e equire d
to o by way o perform nee and product i on level . Finally ,
since the expre s warr nty cla e is matter of negotia tion, the quality to be arranted y the machine tool
manufacturer is contingent upon the ability of the buyer
to properly appraise them nufacturer ' s warranty clause.
CO C
C
I O!
TER III
D H ECO ,.ED TI
In the precedin chapters , the construction and
m eanin of the express warranty clauses that re offered
by the 142 machine tool manufacturers of the survey have
been considered , together with the problems involved in
securing satisfaction for both the buyer and the seller
under such warrantie s . The purpose of this chapter is to
show how the express arranty clause may be used as a
method of obtaining product quality in the purchase of
machine tools.
I . THE BUYE ' GOAL
Satisfying requirements. The buyer of a machine
tool usually has a parti cular requirem ent to be performed
in terms of tolerance, finish or production . The buyer ' s
goal in the procurement of the ma chine tool is to purchase
one of such a quality th tit will be able to satisfy the
particular requirement .
In most situ tions , it is known prior to the purchase
negotiation the ty e of work t the machine tool will be
require d to perform . It is the buyer' responsibility ,
whether he is the purcha ing a ent for a large corpor tion
or an individual entre re eur , to be famili r ith the ork
134
requirements so th the may procure the machine to ol o the
proper capabilities. uring the buyin negoti tion, it is
common for the buyer to acquaint them nufacturer or his
representative with the work requirements involved and to
invite the offering of am chine tool that can satisfy such
needs. In any case, the buyer's purpose is to procure a
machine tool, at the m ost econo ical price, of a certain
quality that will satisfy the particular requirement.
II. PP OAC HI G THE GO .L
~eans to the end. The f act t ha t a certain machine
tool is of a qu lity tha t will satisfy the buyer's partic
ular requirement, cannot necessarily be ascertained by a
review of the manufacturer's literature, or by inspecting
the machine tool after it has been received , or in most
cases, by making a tria l run. It is generally not known
that the desired quality has been purchased in the machine
tool until after an ap ropriate production run has been
.
completed. If the machi ne tool is fo d to be wanting in
some a spect of t he qu lity that the buyer expressed
for, and the manufac t urer agreed to provi e during the
nee d
buying negotiation , some men should be available to the
buyer so tha t satisfa tion may be de nded from t he manu facturer. The buyer may ha ve been i nfl uenced in is
p rchase of the achine tool by the r eput tion of the
a chine t ool uilder, both in constr ctio and in e vie .
135
The buyer y also ve been influenced by hem u ac -
t rer's re presentative and his selling appro ch . However,
neither of these will provide any satisfaction to the buyer
or provide the buyer with any recourse. It remains that
the only means of achieving the certain quality that will
satisfy the buyer's particular requirem ent i s to secure the
written guarantee of the m anufacturer that such a quality
is part of the machine to ol purchased . It follows that in
those cases where the manufacturer is willing to guarantee
that certain quality, the manufacturer is ~so willing to
undertake some sort of remedia~ action in the event that
the buyer fails to find such quality in the machine tool
purchase . This written guarantee of the machine tool
manufacturer is known as the express warranty.
Regardless of its composition or construction, it
appears that the express warranty clause is the means by
which the buyer insures that t he machine tool purchased
will possess a certa i n required quality necessary to
accomplish a particular k "nd of work .
III . CO 0T CTI G THE W TY
uling document . It is pos~ible th t there may be
some difference of opin · on be t ween the buyer nd the
ma ufacturer as to the composition of the expres w r r nty
clause. I sof r a s the buyer is cancer. , he ime o
re a ch gree men on the tter of thee pres w rr nty
136
claus e is rior to the closing of t he buying e oti tion,
an not after the m chine tool ha
operation in the b yer' plant.
been received and set in
ot only is it necessary
to reach agreement on the composition of the express war
ranty cl ause rior to the close of the buying negot i ation ,
but also it is e senti a l to insert the agreed-upon expres s
warranty claus e in t he buyer's written purch se order and
further more, to secure the acceptance of the manufacturer
to such an order so that it can be com e the ruling document
between t he to partie s . To fail t o insert and secure
acceptance of the expres s w rranty clause i n the buyer's
purch se order can result in brogati on of the buyer' s
right under such a provision .
Tail oring the clause. Ea ch buyer of a machine tool
is trying to satisfy his o rn particular requirem ent i n
ter ms of a certain qu lity . Al though there may be many
similarities among the buye r s and their particular require
m ents , e ch situation r equires analysis of its peculiar
proble s . It ould ppear that the i de variety of itu -
tions 1ould h ve resulted in an equal variation i n the
compo ition of expre s w rr nty clauses . o eve , such is
not t he c qe and the te dency has been for the nuf cturer
to offer st nd r expres arranty revision, des i gned
to cover all situations .
137
It is ap arent that there is a need for greater
flexibility in t he composition of the express w rranty
clause in order to secure greate r satisfaction for both the
buyer and the manufacturer. l ithin the frame ork of the
five major component s of the expres s warranty clause , both
the buyer and t he manufac t urer c n dd or remove or alter
in order t o a chieve the purposes of both parties under the
warranty provision . dhile it remains for either party to
take ste ps toward n attitude of greater flexibility in
this matter, it is likely that cceptance of such changes
on the part of the manufa cturer would depend upon the
practicality of t he propos ls initiated by the buyer .
IV . IM ROV I1 G THE d R TY
M eaning of quality. One of the areas in whi ch
improvement can be made i the composition of t he express
warranty clause , is in the establishment of the m eaning of
both the buyer and the manufactu er. In many cases, it
w oul d se em t hat a certain type or grade of performance is
the ki nd of q ality that the b yer is trying to procure n
the manufacturer is offering to sell . owever , performance
has been overlooked in the objects to be expressly ar ranted inf vor of such objects s material and workmanship
that represe t the collected co po ent o them chine to 1
'"'a embled i
ccord ce wit t e manufacturer ' s des· n
138
and ability to roduce . The objects of aterial nd
workmanship do not cover the matter of performance or the
m eaning of quality as it is interpreted by the buyer .
Correction procedure. second area in which
improvement can be made in the composition of the express
warranty clause is the matter of the time involve d for the
operation of the manufacturer's established correction
procedure . s long as the machine tool cannot operate due
to the time involved for endin the defective part to the
manufacturer ' f ctory , ins ectin the part
decision s tote c se o tle d ect , an
d reaching
• +- •
vl. or
the re p ce ent or re ~- ired p ,rt to be returned t t e
b yer ' s 1
'
he yer i s prob 1 being deprived of
profi t . I t wo l d ee _ th t greater a o n t of loc 1
ins pection by f actory field re esen t ative, with uthor-
ity to decide on the site as to the c us e of the defect ,
would serve to decrea se the time involved for the operation
of the standard correction procedure consi er bly .
nother aspect of the correction procedure that is
worthy of consider tion by t he manufacturer
•
the matter lS
of the cost of frei ght for a re lacement or repaire d p rt
f 0 t e u er ' s
l g
t to he uf t ur er ' s pl t d
ret r
•
d e s no t eem
·ust t t t e yer s oul d e r
e t 0 h or C i on roce d"' r
'
espec
•
t e ere t he de s the re ult 0 a error
ose C
in manufacturin, r ther than ab se or e ligence in the
aper tion of the machine tool by the buyer .
139
Using the warranty. s more buyers become familiar
with the importance of the express warr nty clause , the
need for improvem e tin other , re~ ill ecom e evident .
I n order to g in sur nee as to the q lity of the m c i e
tool for a particul a r req irement, t ere 1ill be r eque s
for better de i _it · o o u lity inter of t he de sire d
per or nee . or er o m· n i i z t e t im lo s t during t he
operation of the correction proce dure, the r e will be a
demand for more loca l ins pection of defects in the objects
warranted . Through wi der usa e, the express warranty will
become m ore flexible and more pr actic 1 in its pplication .
BIBLIOGRAPHY
A. PERSONAL I N TER VIE1t/ ~
Brick, Raymond · v., Exe cu ti ve Secretary-Treasurer,
ing Agents' Association of Los ngeles, Inc.,
Central Building, 412 W est Sixth treet, Los
California. January 25, 1956.
urchas-
1122 ark
n ele s,
Shaw, Leiland W ., Resident ittorney, orris-Thermador
Corporation, 5215 0outh Boyle venue, Lo s n eles,
California, on lay 9, 1957.
Stoddard, Robert R., M ana ger of Purchases, orris-The rm dor
Corporation, 5215 oouth oyle venue, Los ngeles,
California, on A ugust 7, 1957.
~all, Sidney H., Attorney, O' M elveny , ~ yers, 433 outh
Spring Street, Los Angeles, California, on February 2 ,
1956.
\Jllesthaver, Carl r tJ., la chine Tool Sales Executive, Barron ,
Rickard & cCone Company of Southern C alifornia , 3850
Santa Fe A venue, Los ~ngeles, Californi a , on ugust 23,
1957.
B . BOOK
Burghardt, Henry D., and Aaron Axelrod. ~achine Tool
02eration. N evJ York: ~ -cG r aw Hill ook Comp ny, 1953 .
585 pp.
Heinritz, . tu art F . P·urchasing Pri nciple s nd 1: pplications.
ew York: Prentice-Hall, I nc., 1951. 6~ .
l• Je sting , J. I-I., I. V. Fine, and members of t he !1ilwaukee
Association of Purchasing gent s ffili ate d with t he
National hssociation of Purchasing Agents, Industrial
Purchasing. } ew York: John T :Tiley Sons, Inc., 1955 .
4-21 Dp.
C. LEGAL B001
American L aw Institute .
1
d rd ompso Co
r
•
,. ' 1
Uniform Commercial Code.
ny , 19 . ~1 .
1 ~ in l ..... :
ro klyn:
. T ew Yor : Conov
---
390 pp .
U nifor m Laws nnotated . s . Vol e I . ro kl
Edward Thompso Co pany , ~950. 40~ p .
•
•
142
West's Annotated C alifornia Codes. ec t i on
t. Paul: , est Publishi g Co p ny , 1 54 .
1619 t o
831 pp.
812.
D. I TI
I .,
Bouvier, John. La Diction
: est ublishing Com any ,
Volu e I I I . t . 1 :
4. 2 5 to 3 04 p .
T
hum ker, /alter, and Geor e F . on sdorf .
l aw Diction ry. hie go: Ca 1 ghc ad
88 .
E.
I
r cr~
-I
'
I '
- .. "" l
ti o
r
i l a
va c
e
•
Today. le elan
•
T
ionc l
•
~
ssociati o
'
956 . 19
pp .
•
IC "
r
Maddock, Charles S. "Basic Law for Purchasing Agents,"
Purchasing, Vol. 42, No. 4 (April, 1957), pp . 130,
132, 134, 136, 358, 362, 364.
Ritterskamp, Jr., James. "Anticipate Your Legal Require
ments," oouthwestern Purchasing %ge5g, Vol. 40, No . 11
(May, 1956), pp. 37-40, 42, 44, - .
" /Jhen Disaster Hits, Are You Bolstering Buyer Confidence
With Warranties?" Industrial Marketing, Vol. 41 , N o .
2 (February, 1956), pp. 61-63.
APPENDICES
APPENDIX A
SAMPLE OF LETTER ADDRESSED TO 327 MANUFA CTURERS
OF MACHINE TOOLS TO SOLICIT SA MPLES O F
STANDARD WARRANTY CLAUSES
60 LaSierra Drive
Arcadia, California
March 4, 1957
The "X" Machine Tool Manufacturing Company
1000 Smith Street
Cleveland 17, Ohio
Gentlemen:
The writer is engaged in the preparation of a Master's
thesis at the School of Commerce of the University of
Southern California. The thesis subject is the express
warranty and it entails analysis of such warranties as
are expressed in the standard terms and conditions of
equipment manufacturers.
144
The purpose of this letter is to ask for a copy of your
standard warranty clause to be used in making this analy
sis. Your company name will not be used, or the clause
reproduced in any way, without first securing your
permission.
Your early forwarding of your warranty clause will be very
much appreciated. If you are interested in the results of
this analysis of standard warranty clauses, a summation
will be forwarded at your request.
Yours very truly,
J.M. C. Olson, Jr.
APPENDIX B
SOURCE MATERIAL
145
TABLE OF CONTENTS
TO SHO\,J BREAKDOWN OF MATERIAL GATHERED AS A RESULT
OF LETTER OF SOLICITATION SHOWN IN APPENDIX A
Column Number
of Source
Material Chart
Description of Material as Divided
Into Categories and Recorded From
The Express Warranty Clauses of
163 Manufacturers of Machine Tools
1 . . . . Numerical Accumulation, running from
1 to 163
2 •••• Identification Number of Machint Tool
Manufacturer
SECTION ON OBJECTS EXPRESSLY wAR RANTED
3 .
• •
. t1aterial
4 .... W orkmanship
5 .
6 •
• •
. Design
• • •
Construction
7 . . . . Parts
8 . . . . Defects
SECTION ON STARTING DATE OF
WARRANTY PERIOD
9 .... Shipment from Manufacturer's Plant
10.
• •
. Delivery at Buyer's Plant
11 . .
• •
Consummation of Contract
12 •... Installation at Buyer's Plant
13 .
14.
• •
. Commercial Operation at Buyer's Plant
• • •
Issuance of Invoice
146
APPENDI X B (Continued)
Column Number
of Source
Material Chart
Description of Material a s Divi ed
Into Categories and Recorded From
The Express \'!arranty Cl ause s of
163 Manufacturers of M achine Tools
15 .
16 .
17.
18.
SECTION ON LENGTH O F i dA RRANTY PERI OD
• •
. One (1) Month
• • •
• • •
Three (3) Months
Six (6) Months
• •
. Twelve (12) Months
SECTION O N EXPREu. ,,1. RRANTY CONDITION
19 .... Normal and Proper Usage
20 .
21 .
22.
• •
. Owned by Original Buyer
Prompt Notification of Defect
• • •
• • •
Used on an Eight Hour Shift
SECTION ON EXPRESS N R RANTY PROHIBITI ON
147
23 •
24.
• • • •
• • •
D amages C annot be Cha r ged to Manufacturer
Unauthorized Repairs C annot Be Char ged to
M anufacturer
25 .... Miscellaneous Expenses, Such a s Installa tion Cost s and Lost Time , C annot Be
Charged to 1anufacturer
SECTION ON C ORREC TION R C EDURE
26 .... Defective Part Is Subject to
Manufacturer' s Inspection
27 .... D efective Part Must Be Returned, Freight
Prepaid, To the M anufacturer' s lant
28 .... Defective Part, ubject to anufacturer's
Inspection, ~ill be Replaced , F . O.B.
M anufacturer's Plant
Column Number
of ource
ateri 1 C h rt
EDI B (Cantin ed)
D escription of aterial s Divided
Into C ate gorie s and Recorded rom
The Express arrant y Clauses of
163 1anuf acturers of chine Tools
0 CORRECTIO PROC DU (continued )
148
29 . .. . Defec t ive Part , ubj ec t t o 1 nufacturer ' s
Option , , ill be R epl ac ed or epaired
30 ... . Defective Part , ill be Replaced or
31 . . . .
e ired Free of Charge
* * * * * *
1 anufacturer s ot H ving n Express
1
, arranty Clau ~e
1 2
3
4
5
6
7
8
9
10 11
1 1 X
2 4- X X X
1 7
X X X
4-
1 2 X X X
5 19
6 20
7
22 X X X
8 il6 X X X
9 27 X X X
10 29 X X X
11 . 10
12 11 X X X X X
11 .l2
14- i6 X X
15 i7 X X X
16 . 19 X X
17 4-2
18 4-1 X X X
19 ~17 X X X
20 4-5 X X X
21 4-9
22 52 X X X
21 71 X X X
24- 51 X lX X
25 54 X
SOURCE MATERIAL CHART
163 1-iANUFACTURERS OF }'IACHINE TOOLS
12
13
14
15 ll6 17
18
19
20 21 22 23
24
X X
X
X X X
X X
X X X X
X
X X X
X X X
X
X X
X . X X
X :x
X
X X
X X X
X X X
X X X X
X X X X
X X
X X X
25
26
X X
X X
X
X
X
X
:x X
X
X
X
X
X
X
Pa~~l ~_pf 7
27
28
29 30
X X
X X
X
X X
X X X
X X
X X
X X X
X
X X X
X X
X X X
X X X
X X X
X X X
X X
X X
X
31
X
X
X
X
~
+
'°
1 2
3
4-
'5
6
7
8
9
10
26 55 X X X
27 59 X X X
28 61 X X A X
29 il8 X X X
iO 66 X X X
il 68 X X X
i2 69 X X X
ii il9 X X
)(
-
~4- 72 X X X
i5 7~ X X X
i6 74- X X X
i7 75 X X X
i8 79
i9 80 X X X
4-0
91
4-1 i20 X X X
42
9::
X X X
4i 98 X X X
4-4-
99
X X X
4-5 100 X X X
4-6 101 X X X
4-7 105 X X
4-8 110 X X J:.
4-9 112 X X X
50 115 X X X
SOURCE MATERI AL CHART
163 tv1ANUFA CTURERS OF MACHINE TOOL
11 12
13
14-
15 16
17
18
19
20 21 22
23
X X X
X X X
X
X
X X
X X X
X X X
X X X X
X X X X
X X X X
X X X
X X X
X X X
X X X X
X X X
X X
X
X X
X X
X X
X X X X
X
X X
.
24
25
26
27
X
X X
X X
X X
X X
X
X X
X X
X X
X
X
X X
X X
X
X
X
X X
X
X
X X
28
29
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
.
30
X
X
X
X
X
X
X
X
X
X
X
X
31
X
._.
Vl.
0
1 2
3
4
5
6
7
8
9
10
51 116 X
52 118
X X X
53
119 X X X
54- 12i X X X
55 125 X X X
56 126 X X X
57
129 X X X
58 130 X X X
59 133
60
135
61 li7 X J< X
62 1~8
6~ 1 ~9 X
)
X
64- 14-1
65 14-1 X X
66 141+
67 14-9 X X X
68 150 X X X X: X
69 151 . X X
70 1 51 X X X
71 154- X X X
72 158 X X
7~ 162 X X X
74- ~21 X
)
X
22 162
XX X
0URCE MA TERIAL C H A RT
163 MANUFACTURERS O F 1'1 ACHI NE TOOLS
11 12
13
14
15
16
17
18
19
20 21 22
23
24
X X X
X X X X
X
X X X
X X X X
X X
X
X X X
X X X
X X
X X
X
X
X X
X X X
X
X X X
X X X X
X X
25 26
X
X
X
X
X
X
X X
X
X
X
., <-41--."' J '-"-L I
27
28
29 30
X
X X
X X
X X X
X X X
X X X
X
X X X
X X
X X X
X X
X X X
X X
X X X
X X X
X X X
31
X
X
X
X
X
X
I--'
\Jl.
I--'
1 2
3
4
5
6
7
8
9
10 11
'/6
168 X X
X
77 169 X X X
78 171 X X .X
79 174- X . X
X
80 175
81
177 X X ~ {
82 178 X X X
81 194 X X X
84 122 x: X
85 181 X X x:
86 184- X X K
87 18 5 X X X
88 186 X X X
89 187 X
~ '{
90 189 X X
91 192
v
£. X .1 \..
92 196 X l. X
91 165 X X X
94 172 X X
95
19;
96 19E X X X
97
200 X X X
98 201 X X X
99 202 X X X
100 201
X :{ X
SOURCE i- 1ATERI AL CHART
163 MANUFAC TURERS OF MA CHI NE TO O L
0
12
13
14
15
16
17
18
19
20 21 22
23
X X X
X X
X X X
X X X
X X
X
X X
X X X
X X X
X
X
X
X X X
~ '{
X
~ r
A. X
X X X
X X X
X X X
X
X X
X
"' r
A
X X X
- ... ,._....,_,,,
24
25
26
27
28
X X X
X X X
X X X
X X
X X X X
X X X
X X
X X
X X
X
-✓
r
X I \.. i \..
X X X
X X X
X X
X X
X X
, r
X A
X X X
4
29
X
X:
X
X
30
X
X
X
X
X
X
~r
. \.
X
X
31
X
X:
.....,
\J1
f\.)
SOURC E MATERI A L C HART
163 MANUFA CTURERS OF M ACHI N E TOOL
1 2
3
4
5
6
1
7 8
9
10 11 12
13
14
15
16
17
18
tL9
20 21 22
101 205 X X X X
102 207 X X X X X X
l0i 209
104- 210 X X X X
105 211 X X X X X X
106 i 2i X X X X X
107 212 X X X X X X X
108 2l i X X X X X X X
109 214 X X X X X
110 216
111 218 X X X X X X
112 219 X X X X X
lli 222 X X X X X
114- 225 X X X X X X
115 229 X X X X X X
116 2~. i
117 2i 4 X X X X X
118 2~5 X X
119 2i8 X X X X X
120 2i9 X X X X X X
121 ~24 X X X X X X
122 24-~
12~ 246 X X
124- 251 X X X X X X
125 252 X X X X X X
23
24
25
26
X
X X
X
X
X
X X
X X
X
X
X
X X
Pa i;§ .. 5 of 7
27 ~8
29 30
X X X
X X
'
X X
X X X
X X
X X X
X X X
X
X
X
X X X
X X X
X
X X
X X
X
X
·,
31
X
X
X
t--J
\J1
w
1 2
3
4
5
6
7
8
9
10 11
126 259 X X
127
2- 62
X X
128 269 X X
12g
270 X X
l~O 271 X X
lil
2- 86
X X X
li2 27i X X X
lii
27- 5
X
li4- 277 X X X X
l ~ - 5
16 X X X
li6 279 X X
li7 280 X X X
li8 282 X X X
1~9 28~ X X X
140 285 X X
141 289 X X X
142 290 X X X
l4i 29~
11+1+ 294- X X X
145 295 X X
146 298 X X X
147 299 X X
148 i08 X X
149 i09
150 i25 X X X
I
SOURCE MATERI AL C HART
163 MANUFA CTURERS OF MAC I-II NE TOOLS
12
13
14
15
16
17
18
19
20 21 22
23
X
X
X X X
X X X
X
X
X
X
X X X
X
X X X X
X X
X X
X
X X X X
X X X
X X X X
X X X X
X
X
X X
24
25
26
X
X
X
X
X
X
X
X
X X
X X
X
X
- ~,.......'-' - ..,_,..~ I
27
28
29 l3 0
X X
X X
X X X
X X
X
X X X
X X X
X X X
X X X
X X X
X X X
X X X
X X
X
X X
X X
X X
31
X
X
f-.J
\J1
------~ -----~-------- ----- --- --- --"--- ----------
SOURCE MATERIA L CHART
163 MANUFACTURERS O F MACH I N E TOOL
1 2
3
4
5
6
7
8
9
10 11 12
13
14
15
16
17
18
19
20 21 22
151 i 00 X X X X X X
152 126 X X X X X
151 106 X X X X X
1 54- 107 X X
155 ~27 X X X X
156 110 X X X X X X
157 111 X X X X X X X
158 115 X X X X X
159 1i X X X X X X X
160
6:
X X X X
161 10 X X X X X X
162 25~ X X X X X X
161 92 X X X X
23
24
25
26
X
X
X X
X
X
X
X X X
X X X
X
X
X
Page 7 of 7
27
28
29 30
X X X
X X
X X X
X X X
X X X
X X X
X X X
X
X X
X X X
X X
31
~
\J1
\J1
APPENDIX C
STANDARD EXPRESS W ARRANTY CLAUSES
Mfr's
Number
1 .
7 . . .
22 . . •
32 • . •
157
arranty Cl use
All machines are guaranteed against efect for
a period of six months. Parts cla imed efective
must be returned F Bour pl ant for examination
and if found defective will be repla ce . No
claims for labor or damages will be honore .
Orders will only be accepted with thi
understanding.
Products are guaranteed against defects in
material or workmanship to the extent that any
product returned, transportation charges pre
paid, to the factory and found efective, with·
one year of shipment, will be repaired or
replaced, f.o.b. fact ory. Under no condition
shall the company be held liable for consequen
tial damages or ins t allation or repair cost .
Products of other manufacture, assembled with
or accessory to these products , are sub·ect to
warranty of their manufacturer.
Each m achine to ol covere by thi pro osal i s
guarantee to be free from efective m aterial
and workmanship for the stand r d period of six
months from shipm ent date, provided equi pment
is used on an eight hour per day basis, has been
given normal and proper us ag e and i s owne by
the original purchaser. During the guarantee
period, parts found defective by our factory's
inspection will be repaired or replaced free of
charge f.o.b. factory. Defective parts to be
returned to factory by purchaser, transportation
prepaid. Cutting tools, dies, grinding wheels ,
special parts made to order, etc., are not
guaranteed.
That the warranty shall survive acceptance by
the purchaser and the vendor undertakes that
any part or parts proving defective within
twelve months after being placed in commercial
operation after a cceptance tests, will be
promptly re placed free of charge F . . b . port
designated on the order, providing the defective
part is returned to us for our examination .
Mfr' s
um be r
33 .
• •
158
1 rranty Clause
hen used nder norm 1 conditions and by the
original purchaser , we warran t the equi pment of
our own manufacture to be free fro defects in
material and workmanshi p for a period of 6
months from the date of shipment from our fac tory , but assume no responsibility for the said
equipm ent ot her than to replace without char ge,
F . O.B. our f actory , 11 such part s of our own
manufacture as may be returned to us pre p id
and found to our own satisfaction to be
defective .
37 ... The Company ' s uaranty is for one year from
date of shipment, agains t defects in material
and workmanshi p only . Parts claimed and proved
to be defective , to the Company ' s s tisfaction ,
sh 11 be re pl aced without char e , ~ . O.B. the
Company ' s f actory . The Company shall not be
liable for l os s of tim e or other damage s on
account of defective parts , and the C ompany ' s
responsibility is l imited , in any case , to the
r eplacement of the part or pa r t s proved defec tive as herein provided .
43 ... ~e guar antee product s of our manufacture to be
free from defective materia l and workmanshi p .
. le will replace , without char e , f . o .b . our
pl ant any part showing defective within twelve
months from date of original shipment , provide d
the grinder is in the possession of the original
owner .
45 . . . Our factory guarantees ea ch machine tool
covered by this proposal to be free ram defec tive material and workmanship for period of
si rnonthq from delivery ~hen iven nor mal and
pr oper usage nd when owned by the original
purchaser . During the guarantee period part s
found defective by our i nspection will be
replaced fr ee of ch rge f . o .b . factory .
Cutting tools , dies, etc . , are not uaranteed .
fr ' s
umber
52 .
• •
159
. rranty Clause
hen used under the proper and normal operating
conditions on a single shift, we wa r r ant to the
original purchaser for a period of twelve months
from date of shipment any equipment of our own
manufacture, to be free from defects in material
and workmanship . ;Je assume no responsibility
for said equipment other than to replace wi thout
charge such parts of our manufacture as we
determine to be defective.
61 ... Products m anufactured by {the manufacturer ] are
warranted against defects and workmanship,
design and material for a period of one year
following the date of shipment from the factory.
lithin which time the material proved defective,
after opportunity for examination has been iven
to ( the manufacturer] , will be replaced without
charge, f . o .b. shipping point . This warranty
does not extend to parts of [ the manufacturer's )
products (bearings , motors , etc . ) hich are
manufactured by others .
66 . . . N e guarantee that all material and equipment
will be of the best quality, and free from
faulty aesign , to be of first - class workmanshi p
and will be of sufficient size and capacity and
proper material so as to fulfill in all respects
such operating conditions as may be called upon
for a machine of this size and power . This
guarantee will cover a period of 12 months after
the installation of the machine with the under standing that we would be notified immediately
when this machine is installed . e will furnish
free - of- charge F .O .B. Cincinnati, any parts the
failure of which was due to materi al defects or
workmanship, subject to our inspection at
Cincinnati.
72 ... The company w rrants the machinery, so far as
of its own anufacture , to be free from defec t s
in material and orkmanship, the company ' s
obligations and liabilities under tis warrantY,
however, being limited to replacin or repairing
free of charge , f.o . b . cars , company ' s factory,
ny parts provin defective under normal use
and service and returned within six (6) months
from ate of shipment . Te company s all be
fr ' s
Number
160
,arranty Clause
given written notice of such alleged defect and
the opportunity for a period of ten (10) days
after receipt of such notice , to inspect such
machinery or p rts before the same is returned
to it . The free replacement of a part or parts
does not include transportation charges to or
from Cincin ati , or cost of installation . No
liability shall attach to company on account of
damages and / or delays caused by such defective
condi tions . The foregoing warranty is i n lieu
of all other warranties expressed or implied .
93 ... Wi t hin a period of six months fro1 date of ship ment from our factory , and when owned by the
original purchaser and being used in normal
re commended service within design limitations ,
we agree to replace fr ee of charge , F . O.B. our
factory , any part of equipment covered by this
order , which upon inspection at our factory is
proven defective in workmanship or ma t erial .
This warranty applies only to equipment man -
factured by {the manufacturer]. ~hen the
purchaser of ( the manufacturer ' s ] components
is an Original Equipment tanufacturer selling
a complete machine , the warranty period starts
on the date of shipment of the complete machine
by its manufacturer to the ultimate user . Parts
incorporated in our products , but not of our
own manufacture , will carry only such warranty
as their manufacturers allow . e will endeavor
to secure for the warrantee the benefits of
such arr nty , if inspection proves such parts
to be defective . o other warranty , whether
oral , statutory , or implied , shall apply to
such products , and we shall i n no event be
liable for consequential or special damages .
126 ... [ The manufacturer ) guarantee~ each machine tool
covered by this proposal to be free from defec tive material an workmanship for a period o
one yea r from delivery when given normal and
proper usag e , a d when ow ned by the origin 1
purch ser, provided written notice of any such
efect is received by t his company within such
one ye r period . uring the guara tee peri od
parts fo n defective b our inspection will
be repl ced free of ch rge f . o . b . our actory .
Mfr ' s
Number
171 .
• •
161
varranty Clause
1
e guarantee (our ] machines against defects in
material and workmanship an will replace or
repair parts proving defective on our inspec
tion , f . o . b . yracuse, N. Y., within six months
from date of shipment, without further liability
on our part , providing the purchaser gives us
immediate written notification of the discovery
of such defects and delivers parts with all
carrying charges prepaid to our factory at
Syracuse , N. Y. All other claims must be made
in writing within a reasonable time after
inspection of the machine or samples , but not
later than t wo weeks after your receipt of
machine . W hen cla i m is made, the us e of the
machine must be discontinued and the machine
held subject to our order . If claim is substan tiated, we reserve the right to make necessary
corrections or to cancel the sale without fur ther obligation to us . le are not liable for
indirect or consequential loss or damage of any
nature, under any circumstances . O ur liability
on any sale made by us is limited to the repay m ent of the sum actually pa i d us by the pur chaser, on the return of t he machine to us . Je
are not responsible for unauthorized alterations
in ma chines or machine parts furnished by us or
for any result of unauthorized alteration . N o
charges against a ma chine will be honored unless
first approve d by sin writing . e reserve
the ri ght to make such changes i n design and
construction as e deem advisable for the pur pose of i mproving the machine or meeting any
special condition , including t he use of
substitute materials to avo i d unnecessary
dela sunder present conditions . Illustrations
are a f air representation but are not bindi g
in etail . e guarantee equipment of other
manufacturers only insofar sit is guaranteed
to us .
202 ... 11 items of or ow manufac ure are uaranteed
against defects in material or orkmanship for
a perio of one year rom date o sale. e
will m ke good an part or parts which , upon
examination your ervice Departmen, shall
dis lose defects in ei her aterial o
Mfr ' s
Number
162
r~. arranty Clause
workmanship . This guarantee becomes void if
article cl imed as defective has been repaired
or altered in any way , or when instructions for
installin or operating have been disregarded ,
or when the article has been subject to misuse ,
negligence or accident. v !here parts are to be
replaced , at our request the old part s are to
be returne d for inspection, carrying charges
prepaid . Defects in electrical equipment, ball
bearings, blowers , and other appa r atus purchased
by us as complete units for installation in or
with a machine , will be made ood by us in
accordance with the standard guarantee of the
manufacturer thereof .
213 ... O ur factory guarantees each machine tool covered
by this pr oposal to be free from defective
material and wor kmanship for a period of six
months from date of shipment , assuming equi pment
is us ed on an 8 hour per day basis , and when
given normal and proper usage and owned by the
original purchaser . During the guarantee
period , parts found defective by our inspection
will be replaced free of cha r ge f . o.b . factory.
Cutting tools , dies , etc., are not guaranteed.
219 ... If within a period of six months from date of
shipment parts are found defective by our
inspection , new parts will be shipped free of
cha r ge, provide d the machine has been given
normal and proper usage and is still the
property of the original purchaser.
235 ... e guarantee all parts of our machines against
defective part s for one year . If the part is
returned and is found to be defective , we will
re place it with a new one .
fr ' s
umber
270 .
• •
163
W arra ty Claus e
e agree to repair a t our factory , or furnish
without charge , f . o . b . factory where made , any
part or p rts to re pl ace materia l which , withi n
90 days from receipt by you , sh 11 prove t o
have been defective w hen shipped , provide d you
give us i n writin immediate notice of di scovery
of such defect , and immediately deliver the
def ective parts to the f actory ,here made . ~e
shall not be liable for damage s due to delays
arising from such defective material , or for
damage , or loss e s , or cost s of any kind , due to
use of equipment having defective ateria l , nor
will any al l owance be granted for any repair
or alterations m ade by you wi t hout our written
consent .
271 ... 11 {of the manuf acturer ' s ] products are
constantly i nspected during m nufacture and
before shi pment to insure the highest standards
of quality , workmanship and ma t eria l s . If used
according t o instr uctions , thi s instr ument will
give you excellent service . It i s uaranteed
against m echanical an electri cal defects .
,hould any repairs be necessary due to such
defect s , this unit will be repaired vithout
charge if sent trans portation charge s pre paid
to our f actory . Ca r ele ss or improper usa ge
voids this guarantee. Unless , in our opinion ,
this product is def initely m echanically defec tive , a nominal charge will be made for repair
of units hich are out of order for reasons
other than defect s in workmanship or m aterial .
273 . .. 1e undertake that ma chinery manuf actured by u s
shall be of first clas~ materi ls and of sound
wor kman ship , and will ma ke good or re pl ace ,
. O.B. our pl nt , any defects or defective p ts
there i n which may appea r within 1 2 months af t er
date of delivery from our dorks and which are
pr ove d to be due solely t o the use of defective
materials or inferior workm nship . ny m terial
no t of our manuf acture is sold der such
guar ntee s given by the maker s .
fr ' s
Numb er
280 .
• •
6
·arr nty Clause
Our factory uarantees each machi ne tool
covered by this proposal t o be free from efec tive materi al and workmanship for period of
six months from shipment date , provi ed e uip ment is used on n eight hour per d y b sis ,
has been given normal and proper usage , nd is
owned by theorigin 1 purchaser . During the
guarantee perio , par t s found defective will be
r ep i re or replaced fre e of ch rge , . o ..
fact ory nd pr ovidi ng prompt notice is given
of any such efect. Defective p rt s are to be
returned to factory by urchaser , transportation
prepaid . Cutting tools , ·e s an speci 1 p rts
ma e to order are not g r nteed .
317 ... dith re spect to any goods covere by this order
manufa ctured by [them nufacturer], [them nu f acturer ] warrants t he same to be free from
defec ts in material nd workmanshi under
ordinary and normal use and service , or a
pe r iod of six (6) months from date of deliv ery ,
the obl igation under the warranty being l imited
to supplying the buyer , F . O.B. i the manufac
ture r ' s) pl ants , repla cements of any goods or
parts the r eof whi ch shall be found to the
sa t isfaction of ! the manufacturer), to be
defe ctive upon examination by its properly
authorized representative or rep r esentat i ve s .
( The manufacturer] will , in no event , be liable
for damages and/ or injurie s which may be
incurred by the buyer , its agents and/or
employees , by virtue of defective material or
of workm nship in the articles or materials ,
sup lied mder this order . 11 purchased items
will be guar nteed only insofar as and to the
extent t t them nufacturer of these items
guarantees them to !the manufacturer]. [The
manufacturer ) makes no warranty or guarantee ,
express or i mplied \ except as herein set forth .
In no event shall , the manufacturer ) be liable
for speci 1 or consequential damages .
Mfr's
Number
319 .
• •
165
darr nty 1 use
[The anufacturer ] will guarantee machine tools
of its manufacture to be free from defective
materi 1 or workmanship for period of six (6)
months from date of shipment from the f ctory ,
when given normal and proper s ge and hen
owned by the original purch ser from (the
manufacturer] or from its istributor . Durin
the guar antee period parts found defective upon
inspection by [the manufacturer ] will be
r eplaced or repaired free of charge F.O .B.
[the manufacturer ' s ] factory. ny component
not of Ithe manufacturer's ] o~n manufacture is
sold under such warranty only s the makers
thereof give [the manufact rer ], and [the manu f cturer] is able to enforce , but such component
part is not guar an eed by (the manufacturer]
in any way . {The manufacturer] shall in no
event be held liable for damage or delay caused
by defective material and will not accept any
cha r ges for work performed by distributor or
customer in making adjustments to machine tool s
unless such work has been authorized in writing
by [the manufacturer). [The manufacturer ]
shall not be liable for indirect or consequen
tial damages , losses or expenses arising in
connection with the us e of , or inability to use ,
its ma chine tools for any purpose whatsoever.
( The manufacturer ] does not assume any respon sibility for damages to machine tools , build ings, other machinery , or for any personal
injury , during demonstration or erection of
machine tools , and customer agrees to hold
[ the manufacture r ] harmless from any property
or personal injury damages arising from such
demonstration or erection . [ he manufacturer ]
neither makes nor shall be bound by any other
warranty or representations , express , implied
or statutory . (The manufacturer] shall not be
bound by other representations made by its
agents or representative~ , unless such additions
or v riations are reduced to writing and
i cor porated in the ccepted or er .
166
1 fr ' s
N umber J rranty Cl use
320 ... Ne guarantee each machine built by us to be
free from defective material or workmanship for
a period of six months from date of shipment
from the factory , when given normal and proper
usa ge and when owned by the ori ginal purchaser .
Je do not , however , undertake liability for
indirect or consequential dama e of any nature
or due to any caus e . y articles not of our
own manufacture i ncluded in this proposal are
sold under such arranty only as the makers
give us , and we are enable d to enforce , but
such articles are not guaranteed by us in any
way .
321 ... [The manufacturer ] warrants the equipment , so
far as the same is of its own manufacture ,
against defects in material and workmanship ,
w hen used by the Purchaser under normal condi tions , for one year after date of shipment from
[the manufacturer ' s ] factories . (The manufac turer's ] obligation under thi s varranty may , a t
its option , be discharged by furnishing or
repairing , withou t char ge, f . o . b . its factory ,
a simila r part to re pl ace any of it s own manu facture which , within the above specified
period , proves to have been defective , provided
the Purchaser has given [the manufacturer ]
immedi te written notice upon discovery of such
defects . (The manufacturer ] shall also ha ve
the option of requiring the return of the
defective material (transportation prepaid ) to
establish the cla i m. If, in connection with
such warranty , repairs are performed by t he
Purchaser with t he written aut horizat i on of
{the manufacturer ), then t he expense in connec tion therewith shall not exceed the cost of
material and direct labor necessary therefore .
Equipment and accessories not manufactured by
the Company are guar antee d only to the extent
of the original manufacturer ' s warranty . o
other warranty , whethe r ora l , sta t utory or
implied, shall apply to the Equipment and [the
manuf acturer ] shall in no event be liable for
conse uential ors ecial dama es .
fr's
Number
322.
• •
167
arranty Cl use
Je warra to you , only , for a maximum period
of one year from date of invoice, that each
item will have been constructed in accordance
with the specifications set forth or incorpo rated by reference in this proposal and will
on date of shipment be free from defects i n
mate ials and workmanship . The life of perish able tools and parts , being subject to operating
conditions not within our control, is not war r anted . Unless specifically designated as
warranties , any references to production
capacities or weights of any item are estimates
and not specifications or arranties. Our
obligations under our warranties are conditioned
upon our receivin your written notice of any
claimed defect or deviation from specifications
promptly , and in any event within one year from
date of invoice, and are limited to repairing
or replacing , F . O.B. our works or other point
of shipment, without charge, any item or part
thereof which proves upon our inspection not to
have been as warranted under normal use and ser vice. hipping charges on any item or part
returned to us for inspection, repair or for
replacement shall be paid by you. If claim of
breach of warranty prove s unfounded , our
inspection, if not at our works , shall be at
your expense at our usual service rates. The
foregoing warranties are in lieu of any other
guarantee or express or implied warranties.
In no event shall we be liable for consequential
or other damages . No allowance will be made
for repairs or alterations except pursuant to
our written agreement; we shall not be respon sible for work done , materials furnished or
repairs m ade by others .
APPENDIX D
C HEC K -LIT FO THE REVI J OF
EXP S J RRANTY CLAUSE
ECTIO I
TH OBJEC T
0
E PRE LY . R NTED
1. fuat are the objects expressly itlarranted?
168
Material ..•••.
Design ...... .
Construction ..••
1 Jorkmanship . . . . .
Part s ....... .
2 . , at is the manufacturer ' s responsibility
concerning accessories, components and
electrical equipm ent purchased from
other suppliers ? •..
3. Does the manufacturer agree to
protect the buyer from patent
infringement suits?
• • • • • • •
• • • • • • • • • • •
4. If the machine tool is of t he
special-purpose type or the
unique-operation type, should
performance be one of the
objects expressly warranted.
ECTION II
• • • • • • • • • • •
THE EXP R NTY ERIOD
5. In connection with the purchase of this
particular machine tool , and based
upon t he estimates of the Departments
indicated , complete the following
chart.
Sequence of Events
Dept . D ept.
Concerned stimate
Shipment--Mfr's
plant to buyer's
:Qlant Traffic {
l
wks .
Installation Maint .
( )
wks .
Initial Operation Ivla i nt .
( )
wks .
First Prod. Run Prod .
( )
ks .
Total Required for CommQrcial
O12eration {
~
wks .
In addition to the time required to
achieve commercial operation, what
is the estimated number of weeks
169
necessary to discover defects? ....... wks .
The number of weeks required to
achieve commercial operation, pl us
the number of weeks necessary to
discover defects, result s in the
minimum number of weeks required
for a satisfactory express warranty
period. Does the express warranty
period offered by the manufacturer
satisfy such a requirement?
• • • • • • • • • •
ECTIO III
EXPRE S !ARR NTY CONDITI ONS
6. D oes the manufacturer impose the
condition of normal and proper
usage.
• • • • • • • • • •
7.
8.
Does the manufacturer impose the
condition thatthe warranty is
extended to the original purchaser
only.
D oes the manufacturer impose t he
condition that the buyer must
notify the manufacturer promptly
of ny dis covered defect.
• • • • • • • • • •
• • • • • • • • • •
9.
10.
Does the manufacturer impose t e
condition that the machine tool
must be operated on an eight hour
shift only.
If any of the conditions imposed
by the manufacturer are not
acc eptable , indicate the reasons
for such a position.
ECTIOi IV
170
• • • • • • • • • •
• • • • • • • • • •
EXPRE NTY PROHIBITION
11.
12.
13.
14.
15.
Does the manufacturer prohibit the
buyer from imposing upon him the
cost of damages?
Does the manufacturer prohibit the
buyer from imposing upon him the
cost for unauthorized repairs .
Does the manufacturer prohibit the
buyer from imposing upon him the
cost for installation l abor .
Does the manufacturer prohibit the
buyer from i mposing upon him the
cost for lost time?
If any of the prohibitions imposed
by the manufacturer are not
acceptable, indicate the reasons
for such a position .
SEC TI V
CORRECTI ON PRO CEDU
16 . Does the man facturer reserve the
right to examine the defective
part .
17. Does the manuf cturer insist t a t
the defec t ive part be returned
to his plant?
• • • • • • • • • •
• • • • • • • • • •
• • • • • • • • • •
• • • • • • • • • •
• • • • • • • • • •
• • • • • • • • • •
• • • • • • • • • •
18.
19.
20.
21.
Does the manufacturer insist that
the buyer must pay the freight
cost for returning the defective
part to his plant?
Does the manufacturer agree to
furnish a replacement part for
171
• • • • • • • • • •
the defective part at his factory,
thereby insisting that the buyer
assume the freight cost of the
shipment of the replacement
part?
Does the manufacturer reserve the
right to replace the defective
part with a new part or , at his
option, to repair the defective
part?
Does the manufacturer specifically
state that the replacement part
will be furnished free of
charge?
• • • • • • • • • •
• • • • • • • • • •
• • • • • • • • • •
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Asset Metadata
Creator
Olson, John M. C., Jr.
(author)
Core Title
The express warranty as a method of obtaining product quality in industrial purchasing
School
College of Commerce and Business Administration
Degree
Master of Business Administration
Degree Program
Commerce
Degree Conferral Date
1958-06
Publication Date
01/03/1958
Defense Date
01/03/1958
Publisher
Los Angeles, California
(original),
University of Southern California
(original),
University of Southern California. Libraries
(digital)
Tag
OAI-PMH Harvest
Format
theses
(aat)
Language
English
Contributor
Digitized from microfilm by the USC Digital Library in 2023
(provenance)
Advisor
Goodell, R. A. (
committee chair
), Anderson, C. R. (
committee member
)
Permanent Link (DOI)
https://doi.org/10.25549/usctheses-oUC113174192
Unique identifier
UC113174192
Identifier
Com MBA '58 O52 (call number),etd-OlsonJohn-1958.pdf (filename)
Legacy Identifier
etd-OlsonJohn-1958
Document Type
Thesis
Format
theses (aat)
Rights
Olson, John M. C., Jr.
Internet Media Type
application/pdf
Type
texts
Source
20230616-usctheses-microfilm-box8
(batch),
University of Southern California
(contributing entity),
University of Southern California Dissertations and Theses
(collection)
Access Conditions
The author retains rights to his/her dissertation, thesis or other graduate work according to U.S. copyright law. Electronic access is being provided by the USC Libraries in agreement with the author, as the original true and official version of the work, but does not grant the reader permission to use the work if the desired use is covered by copyright. It is the author, as rights holder, who must provide use permission if such use is covered by copyright. The original signature page accompanying the original submission of the work to the USC Libraries is retained by the USC Libraries and a copy of it may be obtained by authorized requesters contacting the repository e-mail address given.
Repository Name
University of Southern California Digital Library
Repository Location
USC Digital Library, University of Southern California, University Park Campus MC 2810, 3434 South Grand Avenue, 2nd Floor, Los Angeles, California 90089-2810, USA
Repository Email
cisadmin@lib.usc.edu