Do you know where you stand if an LED product fails early?

Just like any new technology, LED lighting is creating all sorts of new legal and commercial challenges, and the temptation is strong for LED manufacturers to show that they have the same confidence in their products as the purveyors of longer-established technologies.

Two particular points of contention are claims about the useful life of LED products (often with no empirical evidence to substantiate them), and uncertainty around the point at which an LED product can be said to have ‘failed’.

Throwing around figures such as 50,000 or 100,000 hours life in promotional literature has become the norm among LED manufacturers. But such boldness is not without its legal risks – and a disgruntled customer does not need a warranty to have a strong case if a product fails to perform as promised. Here are five things that anyone buying or supplying LED products should be aware of.


 

Making grand claims about how long products last has its risks, says Paul Stone, a partner at DLA Piper

1. Advertising codes
At an ethical level, the UK’s advertising codes provide that companies must hold documentary evidence so claims made about products in ads and promotional materials are capable of substantiation and are not misleading. If manufacturers do not have empirical evidence to justify their 50,000 or 100,000-hour claims for the anticipated life of an LED product, they would appear to be in breach of the code. Anyone can complain to the Advertising Standards Authority – you just fill in a form on its website giving details of the ad and how you think it breached the code. The problem is, the ASA has no legal teeth. It might name and shame a company or ask it to remove an ad, but it relies on advertisers to adhere to its code voluntarily.


2. Trade Descriptions Act 1968
The legal teeth come in the form of the Trade Descriptions Act 1968, which makes it a criminal offence to apply a false trade description to goods. A trade description includes any claims as to the ‘fitness for purpose, strength, performance, behaviour or accuracy… of goods’. An unqualified and inaccurate claim that an LED product is going to last for X thousand hours clearly falls under this, and so runs the risk of being deemed a false trade description. At the very least, then, manufacturers of LED products that make claims they can’t substantiate run the risk of being challenged by Trading Standards Officers.

3. Sale of Goods Act 1979
The next issue to consider is the contractual situation. The starting point is to look at the general law on the sale of goods, governed primarily by the Sale of Goods Act 1979. This act implies a term into most contracts that the goods will be of ‘satisfactory quality’. The definition of satisfactory quality includes the durability of the goods as well as their ‘fitness for all purposes for which goods of the kind in question are commonly supplied’.

A representation about the life of an LED product – 25,000, 50,000, 100,000 hours – could be taken as a benchmark from which to assess the durability of that product. If in practice the useful life falls short of any pre-estimate, then the claim could be said to be a misrepresentation that wrongly induced the buyer to enter into the contract. The actual lack of durability could also amount to a breach of the implied term of satisfactory quality.

Bear in mind that satisfactory quality and durability must be assessed at the point the product was first sold ‘as new’. So there might be scope for a manufacturer to argue that the product failed because it wasn’t properly installed or used. But in the absence of evidence of such misuse, the starting point will normally be that a product that fails before the expiry of its anticipated useful life is likely to have been of unsatisfactory quality.

In practice, the buyer of an LED product will usually have six years from the date of purchase within which to commence a potential claim based either on misrepresentation or breach of contract, thanks to the Limitation Act 1980. 

Where products are purchased by consumers, it is not possible to exclude from their contract the implied term about satisfactory quality. In the case of commercial contracts between businesses, it is only possible to exclude it if, in the circumstances, it was ‘reasonable’ to do so.

"In practice, many warranties do not enhance or extend the right of the buyer of a product at all”

4. Warranties
Most contracts produced by manufacturers for use in a commercial context use express warranty provisions to appear to supplement the terms about ‘satisfactory quality’. These warranty provisions effectively become a representation by the manufacturer as to what, overall, amounts to ‘satisfactory quality’ for their product – while also defining and limiting the way in which the product should be installed and used.

In practice, many warranties do not enhance or extend the right of the buyer of a product at all, they just define and restrict the scope of potential liability (as Simon Waldron of Sainsbury's seems to have realised). Where warranties of this nature can add real value is if, on their terms, they grant an express right to the end user to make a direct claim against the manufacturer (rather than the supplier) for any defects. Without such an express right it is unlikely that the end user would have any direct contractual right of redress against the manufacturer, because there is no contract between them.

But warranties also usually restrict or define what the manufacturer will do if a valid claim is made (see Alan Tulla's article on warranties for more on this). For the claimant there is a balance to be struck between pursuing an ordinary legal claim, with all the potential cost and hassle that that may entail, and pursuing a warranty claim – which is often easier but likely to lead to less generous recovery. For small claims, warranties may be worth their weight in gold, but for larger, more serious claims involving potentially wider loss and damage, a warranty claim is unlikely to provide an adequate solution.

• Read Alan Tulla’s  accompanying article to find out how to get your warranty, your way


5. Liability of professionals
The group that is in potentially the most sensitive position when it comes to legal issues regarding LED products are not the manufacturers or end users, but the other professionals in the supply chain who sit between them.

"If a designer knows about potential problems with an LED product in a particular situation, and specifies it anyway, they may be exposed to liability"

These include the lighting designers, engineers and others who will often be responsible for specifying a product, designing a scheme using the product and installing it in a building. It is they who may have direct contractual liability to ensure that what they have designed or installed meets (and continues to meet) any specification they have signed up to. They will almost certainly have various duties of care to ensure that any work they have undertaken and any design they have developed has been completed in a competent and effective manner.

Regardless of any contractual representations or small print in the manufacturer’s terms and conditions, if a designer is aware of potential problems and difficulties with a particular LED product in a particular situation, then they may be exposed to liability if they nonetheless specify the use of the product in circumstances when they knows or ought reasonably to have foreseen that this might give rise to problems. The duty may well be one to ensure that the end user has been given appropriate advice so they can make an informed decision about what solution to choose.

In most cases the end user is likely to have a far closer relationship with the people who have installed or designed their lighting system than with the manufacturer, and they are likely to be the first port of call when problems arise. This will lead to a degree of self-policing because these professionals are unlikely to expose themselves to undue risk or reputational damage by recommending or using a product in which they do not have full confidence. 

Another wrinkle can arise if an aggressive manufacturer discovers that intermediaries are not recommending its products on technical grounds, and resorts to threats of defamation – but such a heavy-handed approach is rare.
 

DLA Piper  is one of the world’s largest business law firms, with 4,200 lawyers offering a range of services globally to suit clients’ business needs.
www.dlapiper.com

Comments 5

Correction! Sentence should read : However the failure rate and complaints is under 2% with our manufacturer and we are happy that this level is well below the industry standard.

The main issue is that as the LED manufacture market is only a few years old, and all data for product lifetimes supplied by manufacturers is based on extrapolated data. Unless the product has been well designed and extensively tested, including tests on each batch produced, the lifetime of a luminaire is difficult to ascertain. We are wary of working with any company that does not have a rigorous approach to research, design, manufacture, batch testing and low recall rates. The 7 year warranty that we provide on luminaires and drivers is based on hard test data on all products. These also are based on extrapolated data and equate to a light reduction level of 70% of lights giving 70% output after 7 years. However the failure rate and complaints is under 2% with our manufacturer and we are happy that this level is well above the the industry standard. Regarding the terms and conditions of the warranty, we feel it is important that delivery costs are covered should the item be found faulty and a new item sent free of charge. Regarding cost of changing the luminaire, unfortunately I think it will be difficult to get manufacturers/suppliers to cover the labour costs involved in replacement. It is helpful during installation to ensure that the fittings and driver are accessible for the future. There are always accessible solutions available including high voltage plug and play driverless 7W-30W LED luminaires. I’d say whoever you buy your LEDs from, do your research on the company. Are they going to be around in 5 years time? Do they have happy customers and low returns/complaints rates? Ask a lighting specialist if unsure. We are always happy to help with lighting queries and so should others. Transparency in the industry is key as there is such a range of LED quality and performance out there. Farzana - Lighting Partners - Lighting Specialists

I have asked many manufacturers how they would support a 5 year warranty of an LED product if after 4 years I came back and said that the light output of the LED was no longer appropriate for the application, i.e. it was say 70% or less output. I asked would I need light level readings from the installation to compare and if so would they need a copy of readings taken at the time of installation? None have answered so my guess is that 5 year warranties aren't worth the paper they are written on so I wouldn't (as a supplier/installer) pass this on. The best I got was that it should be returned to the manufacturer and a replacement would be sent but this does not answer the question of install/return/transport and labour costs associated. Fluorescent fittings were basically a tin box and reflector and the light source was a 'consumable'. Unless manufacturer's can show that LED sources can be replaced then I don't think we will still be seeing 5 year warranty offers in a for much longer as more claims go in and challenges occur.

As an Electrician I have supplied LeD Lamps to a few customers replacing standard GLS and GU10/MR16 Halogen. I have had some serious problems with the GLS where one manufacturers lamps were failing after just a few weeks with 40% of the units failing. This reputable manufacturer did respond appropriately, ceased the production of the particular model and reimbursed the full cost to me. An alternative make of product failed on initial installation where the nature of the fault would in my view render the product a potential hazard. I raised this with the supplier but had no response to my concern. I do feel that there has been too much of a rush to market on the part of the manufacturers whilst not really considering the effect of the environmental temperature and light fitting that LeD is installed within. Also I don't believe that the manufacturers/designers have considered the potential danger where internal circuitry uses a heat sink that forms the external body of the LeD lamp as is the case with many GLS versions. I am now reconsidering supplying LeD lamps to customers as it seems that the ramifications of this are negative to my business

Many a finger has been scorched , but sadly I have not heard of any prosecutions, and untill than there will be many barking stupid silly warranties

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