Key takeaways
Understanding how product guarantees work is vital
Securing robust protection can make a material difference to project risk and long-term asset performance.
Collateral warranties have limitations
Defects caused by manufacturing breakdown generally fall outside of the scope.
Review terms of any guarantee carefully
Copies should also be provided to maintenance teams to ensure all manufacturer conditions are met.
Introduction
Collateral warranties and third-party rights offer important protection against failures in design and workmanship in logistics projects, but they rarely extend to defects that arise due to manufacturing failures. Product guarantees (or manufacturer guarantees) fill this gap by giving direct recourse to the manufacturer where a component fails due to a manufacturing defect. For logistics operators and developers, this can be critical: failures in roofing and cladding systems, PV installations or EV charging infrastructure can lead not only to costly repairs but also to significant operational disruption. Understanding how product guarantees work, and how to secure robust protection, can make a material difference to project risk and long‑term asset performance.
To ensure meaningful protection can be achieved, product guarantees should be:
Identified early: the types of guarantees that should be available for any given project should be relatively clear from the technical specification. At the outset, purchasers and tenants should request a list of available product guarantees from the developer and consider which may be required. Purchasers should look to procure all product guarantees, but tenants with limited repairing obligations may only require product guaranties aligned with their repairing responsibilities under the lease;
Procured from the manufacturers: most guarantees depend on the manufacturer carrying out inspections and confirming that installation meets their technical requirements. Developers or contractors should set out these conditions clearly and provide a programme for achieving sign‑off so that the guarantee is valid and enforceable – there is a risk of losing rights under a guarantee if the correct process is not followed.
Be assignable, or include named beneficiaries: ideally, the interested party should be a named beneficiary on the guarantee. Sometimes, this may be covered by a guarantee being addressed to “the building owner” or “the occupier” and should therefore be enforceable for any persons or body assuming these roles. It is possible for a manufacturer to name a beneficiary on the policy, or alternatively provide a side letter confirming the purchaser or tenant can enforce the terms of the guarantee. In any event, you should be sure that you are covered under the guarantee to avoid any delays in calling upon the manufacturer to remedy any defects covered, this avoids the need for relying on a third party, such as a landlord, to pursue a claim on your behalf.
What is a product guarantee?
A product guarantee is a manufacturer’s promise that a product meets specified performance criteria and quality standards for a period of time set out within the guarantee. In logistics developments, we commonly see the following product guarantees:
Roofing systems
Look for a system guarantee which covers the full installed system (not just materials) provided that installation is carried out by an approved contractor under a compliant specification.
Typical durations: up to 25 or 30 years, depending on the manufacturer and system.
External cladding / building envelope
Metal sheet systems and composite panels often carry warranties covering coating, colourfastness, and corrosion.
Typical durations: 20–40 years for coating/perforation, depending on environment and usually subject to strict maintenance requirements.
Photovoltaic (PV) systems
Modules: product warranty commonly 10-12 years.
Performance warranty often 25 or 30 years and commits to a minimum output level over time.
Inverters and optimisers usually carry warranties of 5-12 years.
EV charging infrastructure
Hardware warranties typically 2-5 years, depending on the manufacturer and model.
Are collateral warranties not sufficient?
Collateral warranties and third party rights provide protection in relation to claims for negligent design or defective workmanship. However, defects caused by manufacturing breakdown, such as delamination, coating failure, or PV module defect, generally fall outside of the scope of the collateral warranty.
For logistics assets, the building envelope and power systems represent significant capital value. Without appropriate product guarantees, an owner or a tenant under full repairing obligations, may be responsible for the full replacement cost, even where the root cause is a manufacturing defect.
Product guarantees provide a direct contractual route to the manufacturer and typically require the repair or replacement of the defective product, provided that the conditions of the guarantee have been met.
Conditions
Guarantees are not insurance policies and should not be treated as such. They often limit remedies to repair or replacement, and can impose strict conditions which may include:
Installation requirements, such as inspection and sign off by an approved inspector upon completion;
Ongoing maintenance requirements, including adherence to specified maintenance requirements and schedules and cleaning requirements. In some cases, only approved cleaning products or methods will preserve the validity of the guarantee;
Exclusions for certain types of losses, including consequential / indirect losses; and
Exclusions for wear and tear or damage caused by third parties.
Conclusion
To achieve the best position, product guarantees should be expressly included as deliverables within the lease or purchase agreement, ideally as conditions precedent to completion, alongside the usual requirements for collateral warranties and/or third party rights.
The terms of any guarantee should be reviewed carefully, and copies provided to maintenance teams responsible for dealing with the relevant products and systems to ensure that all manufacturer conditions are met. Failure to comply with these requirements can invalidate the guarantee, potentially resulting in significant unplanned repair or replacement costs. Ultimately, product guarantees are an essential part of a robust construction pack for logistics facilities, complementing collateral warranties and reducing long term operational and financial risk.
At Hill Dickinson LLP, we understand the importance of operational continuity across the logistics sector and the disruption that defective products or systems can cause. Our construction and real estate teams work collaboratively to procure the most robust construction packages available for our logistics clients, helping to ensure smooth operations and minimal interruption in the event of system failures.
How we can support your logistics real estate projects
Product guarantees can make a material difference to the long term performance and resilience of logistics assets. If you’re negotiating a lease, acquiring a freehold site, or reviewing the construction package for an existing facility, early advice can help you secure the right protections and avoid costly gaps.
Our construction and real estate teams advise stakeholders across the UK logistics sector on the procurement, review and enforcement of product guarantees, collateral warranties and wider project matters.
If you’d like to discuss how we can support your next project, or review the protections you already have in place, our team would be happy to help.
