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IACCM Contract Management Forum

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N.M.I.A.(P) L.
2019-11-14 15:27:49

Warranty & Discontinuation of Product

Hi everybody,

Now we have a situation here in terms of warranty and product discontinuation :

A large facility was being constructed which required ~1500 architecturally exposed fixtures of a particular style/model. A Purchase Order was drawn up with terms of Warranty of 10 years. This was in 2014.
Cut to 2019, replacement of 9 fixtures are required (5# attributable under warranty provisions + 4# misused by the Purchaser) and it is now learnt that the fixtures itself is discontinued from the product line since 2017.

It is not possible to install 9 fixtures of a different model / look as these are architecturally exposed fixtures / products.
The Supplier has politely declined to answer the conflict of giving a 10 year warranty ending 2024 and discontinuing the product in 2017.

Q1: Advise on possible ways such a situation has been contractually dealt with.
Q2: How can one estimate the damages towards default by the Supplier in committing to its obligations under the Warranty Period, since the product has been discontinued?

Thanks in Advance
 
 •  IACCM  •   2019-11-14 19:30:49
Product replacement or discontinuation is obviously quite usual - but that doesn't alter warranty obligations. The manufacturer should have stocked sufficient to meet likely needs. Without knowing the value. It is hard to know whether it is worth pursuing them; right now it sounds like they are ignoring you in the hope you just give up.
 
 
 •  N.M.I.A.(P) L.  •   2019-11-18 11:10:39
Hi Tim,

Thanks for your viewpoint and I couldn't agree more with you on this.

However, they have actually discontinued the product and their revised e-catalogue confirms this. I am sure they understand that a Purchase Order from us would just add on to their revenue in multiples at best, to risk such ignorance. Of the 28 product categories they have supplied, the issue affects only 1 of the 28.

The query deals around with
(a) non availability of spare parts of the product and
(b) non availability of the product itself.
 
 
 •  Isle of Man Government  •   2020-01-09 15:26:31
Experience suggests this will boil down to the terminology used within your warranty document. It may be unreasonable to expect a supplier to maintain full stocks for all warranty potential on discontinued products (Tim already mentioned value...). More commonly, suppliers offer repair or replacement with the direct alternative product. If the 'standard' warranty were considered unacceptable at the outset it would be appropriate to develop the warranty model to include a recommended spares holding based upon MTBF, or more onerously full replacement of the product range used including mobilisation costs. Either way both parties are fully aware of expectations and obligations from the outset.
Contractually speaking if the warranty document is deficient you are really only left with negotiation. An option being to approach the supplier for access to the original product production drawings and look to have bespoke replacements made.
As a compromise and considering the actual failure rate seems quite low (5# out of 1500#) - though in no way trying to belittle the frustration you must feel - are there visual aspects where use of the replacement product may be viable and use the original products from those locations for the more visible locations ?
 
 
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