Getting Involved in Installed Sales—Part 1

The meeting went something like this: “For years we have been sued as a result of bad installation of our product. Not that long ago, our instructions simply said ‘plumb, level and square’ and we didn’t have these problems. Now, we pass out a basic carpentry course with our products and it has gotten us nowhere.”

“Many of the people installing our products can’t read and those that can don’t follow the instructions anyway. It’s been a problem across the country. We’ve supported AAMA in certification of installers and that has helped. The only way out of this is to assure that the people installing windows and doors do it right. It will take time and money. After we pay to educate them all, we’ll still have to assure that the new guys coming on are doing it by the book.”

“Did you hear that the big boxes are getting into providing installation? What can they see in it?”

“Control of the market and maximizing profit…what they always see in it! By taking over installation, they minimize the likelihood of problems and make some return on their efforts. I want a strategy on installed sales in 10 days. Meeting over.”

The litigation wave has not passed. It’s not just EIFS. Too many homes built in the U.S during the last 10 years have been poorly weatherized, including faulty window installation. Following the adage that advises to control the things you can and pray about the things you can’t (I pray a lot.), will lead you to consider providing installation for the window and door products you sell, i.e., “Installed Sales.”

Installed sales offer the prospect of control over a process that is inextricably bound to the perception of the performance of your product. In reality, the problems with window installation always get the seller and manufacturer involved, and that costs money.

The goal of controlling installation is to improve installation consistency, minimize post-sale expenses and thus maximize customer satisfaction and return on sales. But, the goal of alchemy was to turn lead into gold and we know how that turned out. You can handle the risk/benefit from the business standpoint. You might need some help picking up on the legal issues involved. So, let’s review some legal issues that arise in relation to installed sales. (I am not going to deal with how your windows and doors should be properly installed. You must have that already, or just stop here.)

PILOT PROGRAM

A new process that requires either acquisition of or collaboration with multiple trained crews in the field calls for a phased implementation. Pick one regional area that makes up a significant, but not critical, market for your business. The first phase is your “pilot program.”

In the pilot, you will offer installation along with sale of the product itself. Whether you decide to contract with an outside entity for installation or do it “in house,” you should assume you will be legally responsible to the building’s owner for product and installation failures. Traditionally, the allocation of rights and obligations between a supplier and consumer has been addressed in express warranties. Now, your warranty has to cover both products and the materials/service provided in installation. Depending on the state in which you are operating, there may be differing implied warranties that apply to the sale of the product and the service of installing windows and doors. You have to recognize these factors and make decisions to manage new warranty issues.

“Outsourcing” the installation is no panacea. You will likely be liable to the customer, even though somebody else did the work. For that reason, if you contract with an installer, you want to get indemnification and additional insured status from that entity. A written contract is a requirement, and installation specifications, materials and training/supervision of personnel should all be specified. Without those controls, from a liability perspective you are worse off than the manufacturer that avoids installed sales.

Also, hiring a contractor to work on an improvement to real property may qualify you as a general contractor. The requirements for a license to operate as a general contractor, including registration, fees, bonding and potential insurance requirements need to be known and met. If your company employs installers in a particular state, then you may need a specialty contractor’s license, albeit not a general contractor’s license.

INSTALLATION-RELATED PRODUCTS

Recently, we have had several cases where, facing a claim by the consumer, the manufacturer has had to step into the shoes of a fabricator/supplier to pursue claims against a component part manufacturer. Suddenly, we care about the warranty between our “subcontractor” and its “supplier.” My conclusion is that whether outsourcing installation or performing installation “in house,” you want to be satisfied that:

• the warranties from sealant, flashing and other material manufacturers are adequate;
• installation practices are specified to those manufacturers for approval (or at least you’ll receive no objection); and
• the manufacturers of the components used for installation agree that product of each is compatible with that of the other.

Of course, there are two sides to the warranty issue. Perhaps the more important, but at the same time more obvious, is the consumer warranty, i.e. the warranty given to the end user of your products. Now that you’re also in the installation business, what is your warranty going to cover?

A preferred approach is to warrant that the installation will be performed according to agreed specifications. Certainly, you will want to follow the principles espoused by AAMA/ASTM. Wrapped openings, head drips, properly integrated “shingled” flashing and paper, etc. are all commendable. What I want to add, however, is that you promise (“warrant”) to do the installation in a specified manner and then you make sure that the installation is performed in that fashion. (One reason digital cameras were created.)

Try not to guarantee the effect of the installation, but rather the method of installation.

The above is some of the basics. There is more to be said regarding the phenomena of installed sales. We’ll have to get to the rest a bit later.

Paul R. Gary is principal of PR Gary & Associates, a law firm based in Portland, OR, emphasizing legal issues facing manufacturers of windows and doors. He welcomes feedback on articles published in Window & Door and can be reached at 503/227-8424 or paul@prgarylaw.com.

*Previously published in the Window and Door Magazine