First, thanks to Robert and Gregory for commenting.
Here’s what Robert wrote:
I love the idea, but it has to work favourably for both parties to the dispute.
On the fairness issue Robert raises, my experience shows that arbitration works for both the consumer and the business. Unlike B2B arbitration, which can become as complicated, time consuming and costly as litigation, C2B proceedings are straightforward, streamlined, and far less expensive than litigation. In the C2B context, the questions to be answered are: did the product fail during the warranty period, did a defect in material or workmanship cause the failure, and, if so, did the warrantor stand by its promise to repair or replace the product. Generally, the customer receives the benefit of the doubt in close cases. Of course, the same is true in litigation – virtually every judge or juror who hears a breach of warranty case has had a bad experience with a product and product warranty. So the business is at a disadvantage in both settings. The difference is that in the arbitration setting, the business spends far less to resolve the matter than had it gone to court.
So not only do the parties benefit, but the rest of us benefit because the business does not have to raise prices to account for the higher costs associated with litigation.
Gregory also raises excellent points:
Although my experience is within the EU and Middle East. We go back to the management of customer expectations. Warranty can be and is used, as a valuable tool for OEM’s and Value-added reseller’s alike. Still before litigation or any means of arguing the interpretation of the warranty statement for the product, it is imperative that the seller ensures that the customer understands what and what is not covered. This, I feel, falls directly into the vista of these legal eagles, whom cloud any document with legal jargon and clauses which ties the end user up in knots.
In a perfect world we would have a globally accepted warranty statement for all products irrespective of the country of origin, so that there can be no grey area’s, language blocks etc etc. A definitive push towards global standardisation, and globally recognised warranty statements should be high on the agenda for all OEM’s. The cost savings alone in “leaning” the warranty processes would offset any major claim or claims.
Why then, if all was laid out in black and white with all the work done previously prior to product release would we need litigation or even ADR?
We have a need for lawyers, but in my humble opinion. These companies should spend the money at the start ensuring the warranty statement for their product/s is Ironclad, and that the manufacturer or end user understands their rights in any given situation.
I have long shared these views that a company’s warranty offereing should function as a brand-building tool, and that a warranty or any other legal document chock full of legalese and open to interpretation tends to frustrate the parties’ expectations and produce disputes. (See here and here). A product warranty’s text should be readily understandable, devoid of legalese and require – indeed, be so clear as to permit – no interpretation. Parties to an agreement should not require an arbitrator, judge or jury to tell them what they agreed to, or to discern their respective rights and obligations.
I part ways with Gregory on his call for global standardization of warranty text across product lines. Because of differences in laws, customs and usage a one-size-fits-all approach is not possible, nor even desirable. A company must tailor its warranty to the product, its business philosophy and objectives and the marketplace. And the tailoring should be done with an eye towards creating a warranty document that leaves no room for misunderstanding.