Four-Year UCC Statute of Limitations Does Not Cut off Remedy against Product Manufacturer’s 10-Year Warranty

When a manufacturer provides a 10-year warranty on its product, that warranty is not cut off by the four-year statute of limitations in the Uniform Commercial Code, per the Delaware Supreme Court. Even when the manufacturer limits the scope of its warranty and the end user’s remedy, the warranty is still one that extends to future performance, and the cause of action does not accrue until the breach “is or should have been discovered.”

A building installed with Dryvit products was completed in 2006, and the owner sued Dryvit and Butler Building in 2013. The claims against Butler were dismissed based on the Delaware six-year statute of limitations applicable to alleged defective construction, and the high court upheld the dismissal.

The Dryvit warranty provided:

DRYVIT ... hereby warrants for a period of ten (10) years from the date of substantial completion of the project that the Exterior Insulation and Finish System materials manufactured and sold by Dryvit, including the insulation board, adhesive, basecoat, mesh and finish shall be free from defects in the manufacture of the materials and will not, as a result of such defects, when installed in accordance with the current published Dryvit Specifications, within said period of 10 years, under normal weather conditions and excluding unusual air pollution, lose their bond, peel, flake or chip, and further that the finish will be fade resistant, except for specially produced colors, and will be water resistant so long as the surface integrity is retained ...

...

The sole responsibility and liability of Dryvit under this warranty shall be to provide labor and materials necessary to repair or replace the Dryvit materials described herein shown to be defective during the warranty period, and only for the materials warranted hereunder.

The UCC provision in Delaware provides that a "breach of warranty occurs when tender of delivery is made, except that where a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance the cause of action accrues when the breach is or should have been discovered." The lower court held that Dryvit’s warranty did not extend to future performance, and so the exception to the four-year limitations period did not apply. But the Delaware high court did not agree.

The court noted that there is some split among the states that have considered this issue, with some holding that the limitation in a warranty means it cannot be one explicitly extending to future performance. But other states have held that a limitation does not detract from the promise of future performance, but merely limits the extent of that promise. The Delaware Supreme Court adopted the latter train of thought:

There is no inconsistency within a warranty where it explicitly extends to future performance but limits the remedy for a breach of warranty to repair or replacement of the defective product. The language of the warranty must be examined to determine if it explicitly, that is, plainly, warrants future performance. To be explicit, the warranty must be unambiguous, and will normally "indicate that the manufacturer is warranting the future performance of the goods for a specified period of time." A provision limiting the remedy to repair or replacement is not dispositive, by itself, in determining whether the warranty extends to future performance.

With these principles in mind, we find that the Dryvit warranty clearly extends to the future performance of the cladding used in constructing the [building at issue].

The provisions of the Dryvit warranty, that materials “will not ... lose their bond” and “will be fade resistant” and “will be water resistant” were clearly promises of future performance of the materials. Thus, the owner could pursue its remedies against the 10-year warranty, despite the four-year statute of limitations under the UCC. Which makes eminent sense, else any product warranty longer than four years would be meaningless.

The case is LTL Acres v. Butler Mfg. Co., 2016 Del. LEXIS 233 (April 11, 2016), available here (Lexis subscription required).