In English
language (as could be in every other language) – a word can have multiple
meaning depending on the context and usage !
*Warranty* (noun) -
a written guarantee, issued to the purchaser of an article by its
manufacturer, promising to repair or replace it if necessary within a specified
period of time.
When
it comes to purchasing a Mobile / kitchen equipment / TV / Fridge / washing
machine / Camera and the like – from an authorized dealer or from a grey market
– the first difference is that of ‘manufacturer’s warranty’ ie., backing of the
seller / manufacturer to make good defects free of cost within a specified
time. Though it sounds attractive, it comes with too many strings. Warranties
usually have exceptions that limit the conditions in which a manufacturer will
be obligated to rectify a problem. There would be time limitation as also other
fringe limitations such as handling by some unauthorized persons / damage /
breakage and the like. Further the warranty
could be limited to the parts arising out of defective workmanship and not to
labour or any other ensuing damages.
Besides
standard warranties, there are extended warranties that the dealers make you
buy enticing you with so called benefits. These could be for items which are
not covered in original warranty or for time extension beyond the original
warranty, provided such extended warranty is availed at inception.
In contract law, a
warranty is a promise which is not a condition of the contract or an innominate
term: it is a term "not going to
the root of the contract", and
which only entitles the innocent party to damages if it is breached. A
warranty is not a guarantee. It is a mere promise. A warranty is a term of a
contract. A warranty may be express or
implied. An express warranty is expressly stated (typically, written); whether
or not a term will be implied into a contract depends on the particular
contract law of the country in question.
The
meaning of warranty in Insurance contract is significant – often we hear that
warranties are to be complied with strictly irrespective whether they have a
bearing to a loss ornot. A warranty in an insurance policy is a promise by the insured
party that statements affecting the validity of the contract are true. There
could be warranties imposing certain factors based on which the contract itself
would stand – for instance pre-existing conditions in a Health Insurance policy. It the warranty is not complied with, the
contract itself becomes void.
The
mother of all Insurances ‘Marine Insurance’ has an enactment and well defined
warranties. The MI Act defines that a warranty, means a promissory warranty, that is to say,
a warranty by which the assured undertakes that some particular thing shall or
shall not be done, or that some condition shall be fulfilled, or whereby he
affirms or negatives the existence of a particular state of facts. According to the provisions of the Act - warranty
may be express or implied. The warranty
as specified herein, must be exactly complied with, whether it be material to
the risk or not. If it be not so complied with, then, subject to any express
provision in the policy, the insurer is discharged from liability as from the
date of the breach of warranty, but without prejudice to any liability incurred
by him before that date.
However,
non-compliance of a warranty is excused when by reason of a change of
circumstances, the warranty ceases to be applicable to the circumstances of the
contract, or when compliance with the warranty is rendered unlawful by any subsequent
law. A breach of warranty may be waived by the insurer.
There
are Express warranties, which may be in any form of words from which the
intention to warrant is to be inferred.
Such warranties are contained in the Policy document or in any document incorporated
by reference into the policy. There are some implied warranties but they would
not be implied in certain circumstances, say as to the nationality of a ship or
that such nationality shall not be changed during the risk period. Some warranty (or their nature) might change
depending on the type of policy. For
example, In a voyage policy there is an
implied warranty that at the commencement of the voyage the ship shall be
seaworthy for the purpose of the particular adventure insured. However, in a time policy there is no implied warranty
that the ship shall be seaworthy at any stage of the adventure, but where, with
the privity of the assured, the ship is sent to sea in an unseaworthy state,
the insurer is not liable for any loss attributable to unseaworthiness. In a policy on goods or other moveables there
is no implied warranty that the goods or moveables are seaworthy.
In
every Marine policy, there is an implied warranty that the adventure insured is
a lawful one, and that, so far as the assured can control the matter, the
adventure shall be carried out in a lawful manner. There are more types of
warranties / implied conditions on voyage, commencement, alteration, delay,
deviation, sailing and more. With this lengthy background, now read this
interesting article on ‘warranty’ – one pertaining to ‘building warranty’ as
read in Stuff.co.NZ. titled “BuiltIn Insurance loses
underwriter for its building warranty, but finds replacement”
A builders warranty protects new home
owners in case their building firm collapses during construction and the 10
year period afterwards when builders must fix defects on a new home or major
alteration. A third building warranty has been hampered by its insurer pulling
out of the global market. However, the provider of the warranty, BuiltIn
Insurance, says it has found another backer and is also extending coverage to
other builders who have lost theirs. BuiltIn holds about 2000 warranties, and
its customers include the 250-strong Combined Building Supplies Co-operative.
It is stated that
building guarantees had to be suspended after global insurer pulled out – this
caused the home owners researching on the builders after insurer removed element of its
10-year guarantee cover. It is stated
that BuiltIn follows Certified Builders and Stamford Insurance who all had
warranties backed by the underwriter, a subsidiary of Lloyds of London. Certified
Builders, which loses its coverage this week, has not been able to find an
insurer so far. Stamford, which lost its warranty on December 31, says it is
close to announcing a replacement backer. Both organisations stressed that
existing policies would be honoured. The fresh difficulties finding insurance
have amplified calls for the Government to make building warranties compulsory.
Local building
owners with potentially flammable building cladding are being urged to join a
class action seeking compensation from manufacturers. After CBL Insurance's
liquidation last year, the only providers consumers have are BuiltIn, several
group builders and the Registered Master Builder guarantee, which is provided
by one of its subsidiaries. Master Builder chief executive David Kelly said his
organisation supported a mandatory warranty but felt consumers should still
have options. "Our position is that if you're building a new home or a
substantial renovation, you should get a guarantee. We think that's just common
sense." Other factors to consider included the strength of the backer.
"I think the
critical thing is to look at who's providing the guarantees, are they
substantial, are they solid? In our case, we voluntarily, through our
guarantee, measure ourselves against Reserve Bank requirements." Certified
Builders spokesman Jason McClintock also supported the mandatory warranty idea,
saying the current situation left a big hole in the market. "We do need to
fill this hole to better protect New Zealand consumers." The Ministry of
Building, Innovation and Employment (MBIE)
says the mandatory warranty idea is "still under active
consideration" and a decision was due later this year. Master Builders chief executive David Kelly
says consumers should have a range of choices when it comes to building
warranties. However, after ministry consulted the industry last year, there
were concerns that New Zealand might struggle to find an insurer big enough to
take on demand.
Rickard doubted New
Zealand's leaky buildings legacy were a detraction, but he said the number of
underwriters in the construction sector was shrinking. "The fact we've
managed to find a small niche player, they don't have unlimited capacity. If
the market tripled, they would have to get more capital, there would be some
fairly deep digging to find the capacity.
Rickard said it was not clear why insurers were reluctant to insure the
construction sector, but he had heard of concerns about exposure to flammable
cladding after London's Grenfell Tower fire. "There's just a lack of
enthusiasm to do this kind of thing in construction around the world and I
think if there was a player who was keen, New Zealand would be as attractive as
anywhere else."
Interesting !
With regards – S.
Sampathkumar
27th Jan
2020
PS: with liberal
inputs taken from NZ news paper stuff.co.nz.
No comments:
Post a Comment