Warranty and guarantee: What's the difference?

Who will decide whether a building performs to the standard to which it was designed? LEED v4 changes the way an engineer must think during design.

01/10/2014


Warranty and guarantee sound similar and share a common root, but they can mean completely different things, especially if you are working on a project that incorporates a building rating system such as U.S. Green Building Council LEED v4 or Green Globes that rely on proper performance of building materials.

With the introduction of LEED v4 came some subtle—and some not so subtle—changes in the way that the engineer must think during design. Compared to previous versions of LEED, LEED v4 places a larger emphasis on actual building performance through the LEED Dynamic Plaque, which monitors a building's real-time resource consumption and can change the building's rating on the fly. In the past, buildings were rated on design, construction, commissioning, and paperwork requirements, but now buildings themselves will deliver an unbiased report on their actual health.

This new tool introduces a large amount of physical metering infrastructure, data capture, communication, and monitoring capabilities into the project, adding significant risk to the engineer, contractor, commissioning agent, and, in fact, everyone else involved in the project except for the owner.

Exactly who will be held responsible for the buildings that do not perform to the standard to which they were designed is something that the courts will decide if the owner takes legal action. I'm pretty sure the first couple cases will be quite interesting, as the lawyers are going to pick apart the design documents.

In the meantime, however, engineers need to incorporate performance specifications into project manuals that, at minimum, properly define achievable performance targets. This is where the subtle differences in language become key players (see Black's Law Dictionary for detailed information).

The legal definition of warranty is "an assurance, promise, or guaranty by one party that a particular statement of fact is true and may be relied upon by the other party." The legal definition of guarantee in noun form is "an undertaking or promise that is collateral to the primary or principal obligation and that binds the guarantor to performance in the event of nonperformance by the principal obligator." In plain language, this means that if our building envelope system does not work as promised, liability for the warranty transfers to the guarantor who, in our case, is the contractor or installer.

Generally, it is good practice to avoid the use of guarantee and instead exclusively and consistently use warranty or warranty period. It is also good practice to not specify a warranty period for each product or specification (unless specifying a minimum warranty term) as doing so may limit the rights of the owner, such as reducing the amount of warranty coverage available. In any case, be careful that doing so does not conflict with the contract and supplementary conditions.

Going back to the example of the building envelope system, we see that the manufacturer has a warranty for the material when properly installed. The contractor provides a warranty for the workmanship involved in installing the materials and a third party guarantee for the materials. Whatever warranty exists, it is separate from the one year correction period, during which time the contractor is obliged to correct any deficiencies regardless of warranty.


Michael Heinsdorf, PE, LEED AP, CDT is an Engineering Specification Writer at ARCOMMasterSpec. He has more than 10 years' experience in consulting engineering, and is the lead author of MasterSpec Electrical, Communications, and Electronic Safety and Security guide specifications. He holds a BSEE from Drexel University and is currently pursuing a Masters in Engineering Management, also at Drexel University.



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