Monday, July 9, 2018

Selling a Warranty Liability for Extra Profits?

Boatyards and dealers are obviously in business to make money and they come up with creative ideas to maximize their profits.

Think of a large scale production boat builder like Princess. They produce give or take 300 boats per year, 100 of which are sold through Princess Motor Yacht Sales, their main dealer in UK.
How about a special arrangement where the warranty liability of the shipyard is transferred (or rather sold) to the dealer in return for extra discount?
Seems like a win-win situation...
The shipyard is relieved from the hassle of dealing with warranty issues, and dealer gets to increase its profits. A much more relaxed quality policy could then be adopted by the yard, further reducing costs. What the dealer needs to do is build a service team, a local company to put them on its payroll, and a portfolio of pushover clients who will be ready to accept that production defects and quality issues in their boats will be handled under warranty.

Before we decided to purchase the boat, the sales pitch also included a description about how their technical service in the Mediterranean were the best, and that alone in the Balearics, Princess had 60+ engineers and technicians in their payroll. They even set up a new company in Malaga for this purpose (Princess International Yacht Sales and Service SL - CIF B-92192954)

Now let's have a look at a few conditions set out by Princess Motor Yacht Sales in their standard sales agreement:

This clause states that the warranty period is 12 months, that all defects shall be reported to Princess in writing within 14 days from the defect is or should have been (?) discovered.
Then this begs the question "if Princess denies to fix an item claiming that it should have been discovered earlier, who will decide whether it should really have been discovered earlier or not?". Most probably the courts or arbitrators, that is depending on your chances (especially as a non-English Party in an English court) to win the argument - after paying a fortune to your lawyers.
In the meantime, either you will have to live with the problem(s) or have it repaired at your own cost.

Let's assume that Princess agrees to fix defects, which actually took more than 2 months in our case ruining half of our season. Here is a clause foreseen by Princess for such conditions:

This is how we read this clause: "It is quite possible that you might have paid millions for a piece of junk. We'll fix it around our schedule and make it look like we do it around yours. You can go home or do whatever you want in the meantime but we won't pay for any of your expenses, however our apologies are free of charge. In any case, you may not be able to use the boat for weeks or months or maybe (in extreme conditions) even not at all during this season. We don't give two *hits if this causes any financial loss or inconvenience to you. And when it's time to sell your boat, you will have to shoulder the loss of value because the buyer's surveyor will have spotted our repair works.

Go in as a pig, come out as a sausage 

Production boatyards are businesses driven by money. Whatever they say, they do not care how you feel about their product. They sell their boats to make money and they fix it because they are worried about hindering their reputation and also concerned about possible legal issues, which all comes to even worse publicity.
You may opt to lawyer up and slug it out behind closed doors. No legal system in the world could guarantee that the righteous party will prevail and win. However, any and all legal systems in the world guarantee 3 facts:
  1. No matter the outcome, each party will make their lawyers' day
  2. You will get so tired and pissed off that you will regret recurring to legal action
  3. At the end, no one -except your friends and family- will be aware about the living hell that you have gone through during the process. The injustice will go on and on.
Quoting Ambrose Bierce:
"Lawsuit: A machine which you go into as a pig, and come out of as a sausage"

Share Your Experience and Raise Awareness!

There are tens of platforms out there where hotels, restaurants, movies, books, businesses, products etc. are all reviewed nowadays. We all are so used to checking reviews before making a decision. People who made use of the product or service freely write what they think about their experiences, and we take advantage of this precedent to decide.

Why not also share your experiences with expensive purchases like boats and let other potential buyers become aware? It costs nothing, except your time to edit a blog, but in return you get to raise public awareness and maybe prevent other boat buyers from going through the same painful and expensive process.
Your experience with a new boat purchase could be pleasant or otherwise, just set up a blog and let google do the rest!

Quoting George Washington:
"Your opinion, whether it be good or bad, has a powerful influence"


No comments:

Post a Comment

Feel free to share your thoughts!