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Mon, Jun 17, 2013

Avidyne Reduced Cost Warranty Program May Be No Bargain -- Legally Speaking

Avidyne User Community Increasingly Vocal About Legal Concerns Over Warranty Indemnifications

It was presented as a bargain to certain Avidyne avionics product owners who wanted to control avionics service/warranty costs for the future... but the small type suggests that it might be a costly step for certain Avidyne operators.

In a recent announcement for Avidyne owners, the company offered an "AeroPlan" that seems, at the outset, to offer significant cost savings for operators of the highly regarded avionics products offered by the company.

The initial announcement sounded promising...

"Avidyne Corporation is rolling out our new AeroPlan Extended Warranty program for owners of Entegra and Entegra Release 9 (R9) integrated flight deck systems. The AeroPlan program is an important element in Avidyne's commitment to long-term support of its products in the fleet.

With AeroPlan we have lowered the prices for extended warranty protection by as much as 46% compared with our previous FlexCare plans, including new lower priced plans for those currently covered under two-year factory warranty or a FlexCare warranty, those who are not covered at this time, and those who are not covered and are in need of an immediate repair.

Entegra and R9 customers currently covered under an existing FlexCare plan can transfer into the new AeroPlan plan and receive an extension on your current warranty of 33% added onto its remaining term, plus you will realize additional cost savings at renewal time.

During the AeroPlan launch 'Open-Enrollment' period (June 5 - July 1, 2013), Avidyne will allow non-warranty Entegra/R9 owners to enroll in the AeroPlan plan immediately at the lower renewal-rate pricing with a savings of up to 46%."

The promotional announcement appeared to be a positive one... but seemed to omit or avoid salient details that could be found in remote links to quite a bit of legal boilerplate that, when read, resulted in significant concern to dozens of potential buyers who took the time to read it. No one has to tell anyone else in this business that legal concerns and costs are driving many manufacturers to less impressive bottom lines, if not outright bankruptcy, but Avidyne's potential solution to possible legal woes may have gone too far.

In a section detailing 'Avidyne Waiver, Release And Indemnification,' Avidyne requires the following legal agreement (in part) be signed in order to take advantage of these 'bargain' warranty rates:
(1). This agreement and the AeroPlan extended written warranty attached to this agreement and provided by avidyne corporation for its aviation products are exclusive of and in substitution for any other remedy available under the law. I understand my remedy arising out of or related to use of Avidyne aviation products for the life of the prouct is limited to the repair or replacement of the product to be determined in avidyne's sole discretion. I hereby agree to waive, release, disclaim and renounce any other warranties, obligations and liabilities, whether express or implied, including the warranties of merchantability and fitness for a particular purpose, as against Avidyne corporation and its officers, directors, successors, assigns, insurance companies, agents, employees and affiliates (the released parties).

(2). I hereby release Avidyne corporation and the other released parties from any and all liability, loss, injury, damage, costs, claims and/or causes of action, including but not limited to all claims for bodily injuries and property damage arising out of or related to the use of said aviation products and the use of the aircraft in which the product is installed, whether in strict liability or in tort, regardless of how such injury, damage or loss may arise and regardless of whether the injury, damage or loss is occasioned in whole or in part by the negligence, neglect or fault of any one or more of the released parties. Notwithstanding the above, this provision (2) shall not apply if the national transportation safety board determines that a defect in Avidyne's aviation product was the probable cause of the accident or incident. All other provisions of this agreement will remain in full force and effect.

(3). Avidyne corporation and the released parties will have no obligation or liability whatsoever, whether arising in contract (including warranty), tort (whether or not arising from the negligence of Avidyne), strict liability, or otherwise, for any incidental, consequential, general or special damages.

(4). Except for claims alleging that Avidyne corporation has failed to provide the remedy contained in any express written warranty provided by Avidyne with its avionics equipment, I will indemnify and hold harmless Avidyne corporation and the released parties from and against all claims referred to in the preceding paragraphs, and to pay the costs of defending such claims (including attorney's fees), regardless of whether the alleged injury, damage or loss is occasioned in whole or in part by the negligence, neglect or fault of any one or more of the released parties.

(5). The law of the state of Delaware shall govern the construction and enforcement of this agreement, as well as all aspects of the parties' relationships and any disputes that may arise between them. Any and all disputes or claims that I or my heirs and assigns may assert against Avidyne corporation shall be submitted to binding arbitration before the American arbitration association within the state of Delaware.

(6). The invalidity or unenforceability of any provision of this contract shall not affect the validity or enforceability of any other provision hereof. If any of the covenants or agreements in this contract are determined to be unenforceable, then the parties agree that all other terms are to remain in full force and effect.

ANN has had a number of legal experts look this over and, without exception, each has responded with 'significant' concerns over what this agreement might mean to a warranty holder. More than just releasing Avidyne form liability and offering certain legal protections, the documents suggests that the aircraft owner/warranty holder who signs this agreement, could, under certain circumstances, wing up bearing up bearing the costs and liabilities for defending Avidyne.

While a number of the Avidyne customers who have spoken up on the matter seem deeply sympathetic to the damage done by 'out-of-control' legal costs and exposures, the fact that they could wind up paying the costs for defending Avidyne against a lawsuit and potentially holding the bag for any awards reached in such a matter seems too high a risk and too high a price to pay. Worse still; there are serious questions about the duration of indemnification involved... and several analysts suggest that there is no 'sunset' in this agreement... even for an owner that sells the plane to another that may become involved in an accident long after the transfer of ownership.

ANN is working with a number of parties to further analyze the contract and has interviews scheduled with Avidyne this week. While many potential customers understand that Avidyne is attempting to limit their liability and protect their company, the majority of folks reaching out to ANN not only have great concerns about the risks of such an agreement, but seem to indicate that this kind of contractual offering is a reason to avoid Avidyne in the future. Others questioned why Avidyne, having survived some downtimes and a pretty thorough "screwing over" by Cirrus on more than one occasion, would resort to such 'abrasive' or 'hardball' tactics at this time. Most worrisome, though, is the possibility that such tactics and contracts could become the wave of the future... leaving customers not only with little choice but to sign such agreements in order to keep their costs down (or even get parts and service) .... while fearing the potential time-bomb of a legal dispute to wipe out their assets or, worse, those of their estate. In the words of one legal analyst, "...there is no reason for an owner to sign this... the risks far outweigh the benefits and I can't imagine any reason to agree to such terms. It's a bad deal."

ANN will continue to research and analyze this story and offer updates when more info becomes available.

ANN E-I-C Note: Avidyne did submit an initial response to questions raised while researching this story. While submitted without any initial restrictions, Avidyne followed up with an email within 30 minutes, and asked that the response be held until other staffers could approve it, today, Monday. We have agreed and look forward to following up with this statement as well as additional details.

FMI: www.avidyne.com 



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