Because of the tremendous amount of carpet sold through distributors today, the question as to who must bear the responsibility for defective goods is sometimes difficult to answer. In most cases, each buyer or seller, whether dealer, distributor, sub-contractor or consumer, may only legally hold liable the person or entity from which he actually purchased those defective or claimed defective goods.

The basis of this is the legal concept known as privity of contract. Under this rule a person who claims to have received defective goods can only look to the one from whom he bought it. This warranty is implied by law into every sale of goods and runs from seller to buyer.

In the typical case, that where the complaining consumer cannot be easily satisfied, the customer with a claimed defective floor sues the retailer. In turn, the retailer is then caused to sue his distributor who must then look to the manufacturer for relief. Wouldn’t it be much easier if the consumer could look directly to the mill, where, in most cases, the fault for the defective goods lies? Obviously, the answer to this question is, yes. In fact, the federal government has passed a law known as the Magnasum-Moss Consumer Protection Law which gives a consumer the right to directly sue the manufacturer of the goods in a local state court. Often, however, even when the consumer sues the manufacturer directly the other sellers may still be involved.

In this case, the plaintiff, a local restaurant owner, sued the mill of the vinyl flooring installed in the establishment, claiming it was defective. The federal law generally applies only to consumers who have purchased products for their home. The concept of privity thus could have acted as a bar in this lawsuit. However, since the defendant didn’t raise it, it was waived. The lawsuit was for approximately $5,000.

Claiming the problems were the result of faulty installation and not the materials, the mill sued and brought into the same lawsuit the retailer who sold and installed the goods. The dealer, however, was also not ready to take the blame, so he sued the distributor which sold him the underlayment that was installed as a base for the vinyl.

In that suit, which also became part of the original action, he claimed that any defects complained of by the restaurant owner were the result of defects contained in the underlayment.

The distributor, claiming it only bought and sold that product and, thus, should not be responsible if it was defective, started yet another lawsuit against the seller—the manufacturer of the underlayment. This suit was also made part of the original.

By this time, the legal bills for the four lawyers for the defendants far exceeded the original $5,000 claim. Three of them—the dealer, the distributor and the underlayment’s mill—agreed to chip in $1,000 each to settle this case. The vinyl manufacturer, or at least its attorney, refused to contribute to this settlement, stating it wanted to make this a test case.

For over two years this case dragged on. Depositions were taken, reports were exchanged and pre-trial conferences were held. All through this process the manufacturer stood by its no-pay position and refused to even discuss a settlement. As the trial date neared, my file was over three inches thick and contained many hours of both my work and the work of the other lawyers involved.

The day before the scheduled trial, one that would probably take a few days because of the number of parties and cross claimants, I received a phone call from the plaintiff’s lawyer, who told me the vinyl mill had finally broken down and agreed to pay $1,000 toward the settlement. This, when combined with $3,000 from both my client and the other two defendants, would give the plaintiff a total of $4,000, a sum he agreed to accept. The case quietly ended.

Sounds ridiculous? It was. Especially when you compare it with two cases I had just last week. In both, my dealer client was sued by unhappy customers. In both, I was able to make one phone call to the immediate sellers, a distributor and a mill, and resolve the problem.

The manufacturer agreed the white carpet did have some oil spots that, even though apparently cleaned, might still be visible and it agreed to replace the product.

In the other case, the distributor had to first contact its mill before it was agreed that, even though it may not have been warranted, in the interest of policy and the possible costs of legal fees, the best choice was to give the consumer the requested replacement.

Generally speaking, the amounts involved in cases like these are comparatively insignificant and, right or wrong, it almost always pays to at least attempt a settlement. Principles are nice but not when they start costing a businessman money.