Manufacturers No Longer Honoring Warranty Flat Rates and Discounts

By Trent Cotney, Cotney Attorneys & Consultants.

Over the past several months, roofing contractors have been facing numerous challenges, including labor shortages, extreme weather events, material delays and price increases.

In addition to those already taxing issues, some contractors have recently been informed that certain manufacturers are canceling their flat rats and special pricing for warranties negotiated with roofing contractors.

This means contractors will have to pay full freight costs for warranties, including for no dollar limit warranties (NDLs). Such a change will inevitably mean that contractors will be forced to try and pass along pricing increases to their general contractors or owners if possible.

How contractors are responding

Obviously, contractors who have received such notifications are surprised by this development—and none too pleased. Many considered their suppliers to be valued business colleagues, many they have done business with for years, so this action feels like a betrayal of long-term trust.

These contractors have been good customers, paying their bills on time, attending training programs, and acting as brand ambassadors by promoting their products. This sudden unexpected and unbudgeted expense will hit them hard, perhaps leading to layoffs or shuttered companies. In addition, contractors argue that this decision by manufacturers has no rhyme or reason since there is no need for warranty costs to increase—unless these manufacturers have allowed inexperienced and unlicensed contractors to install their materials. And if that is the case, the licensed contractors should not be held accountable.

The repercussions of this decision

Manufacturers may argue that they are feeling the supply chain squeeze and are financially strained as well, and they may believe they have no recourse but to discontinue honoring these flat rates and discounts. It is unfortunate, however, since this decision will have a substantial impact on small businesses that are already struggling in the current atmosphere.

Is this action legal? Given that the warranty prices were negotiated between contractors and manufacturers, it depends on the language of the agreement. In the meantime, manufacturers who have chosen this course of action have likely lost the trust of the contractors affected. And no matter how this matter is resolved that lack of trust will hurt the roofing industry across the board.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

Trent Cotney is an advocate for the roofing industry, General Counsel of the National Roofing Contractors Association (NRCA) and several other industry associations. For more information, contact the author at 866.303.5868 or go to www.cotneycl.com.