DDBA 4990 Week 2 Ethics Brief Example

A Lapsed Warranty Is Not the End of the Obligation: An Ethics Brief Arguing That a Heating and Cooling Contractor Should Notify Six Years of Customers About an Early-Failing Compressor and Replace It at Cost

Student Name

Walden University

DDBA 4990: Business Essentials

Instructor Name

Month Day, Year

A Lapsed Warranty Is Not the End of the Obligation: An Ethics Brief Arguing That a Heating and Cooling Contractor Should Notify Six Years of Customers About an Early-Failing Compressor and Replace It at Cost

The Decision and the Position

Carver Comfort Systems, a composite heating and cooling contractor with 31 employees in the Kansas City area, has learned that a compressor model it installed in about 640 homes between 2019 and 2024 fails at roughly three times the expected rate after year five, and the manufacturer's five-year parts warranty has now lapsed on most of those units. This brief argues that Carver should notify every affected customer by letter and phone within 60 days and offer to replace the compressor at Carver's cost for parts and labor, without profit, for any customer whose unit has not yet failed or fails within the next three years. The decision has costs, and the strongest objection to it is serious. But the position follows from what Carver knows and what its customers do not.

Definitions

Three terms carry this argument, so each is fixed here. A legal obligation is one that a court or regulator could enforce: here, Carver's duties under its own installation warranty, which covers labor for one year, and under state consumer protection law. An ethical obligation is one that follows from a widely shared moral principle even when no law enforces it, such as not allowing someone to suffer a harm one could prevent at reasonable cost when one knows of the risk and they do not. A discretionary obligation is one that would be admirable to meet but is not owed, such as donating systems to a shelter. These definitions follow the categories Carroll (1991) used in describing a firm's economic, legal, ethical and philanthropic responsibilities, with philanthropic called discretionary here.

Where the Decision Sits

The decision does not sit in the legal category. Carver's labor warranty expired years ago for nearly every affected customer, the manufacturer's parts warranty has lapsed and nothing in Missouri or Kansas consumer law requires a contractor to notify past customers of a supplier's product weakness discovered after the warranty period. Carver could lawfully say nothing.

Nor does it sit in the discretionary category, which is where Carver's owner first placed it, describing notification as "going above and beyond." Discretionary acts are gifts. This is not a gift, because Carver has information its customers lack and that bears directly on their safety and money. A failing compressor in a Kansas City July can leave an elderly homeowner without cooling for days while a replacement is ordered; Carver's service records show that 23 of the first 41 failures happened between June and August. Carver chose this compressor model, installed it and profited from the installations. Knowledge of a foreseeable harm, combined with having been part of creating the risk, places the decision in the ethical category. Schwartz and Carroll (2003) argued that the categories overlap and that ethical duties often sit beside economic ones; here they do, since Carver's reputation in a local market depends on its past customers.

Answering the Hardest Critic

The best case against the position is that Carver did nothing wrong and should not bear a cost created by the manufacturer. Carver installed a model the manufacturer sold as reliable, installed it correctly and honored every warranty it gave. Replacing 640 compressors at cost would run about $1,150 per unit in parts and labor, or roughly $736,000 if every customer accepted, against Carver's annual net income of about $410,000. A duty that could threaten the firm's survival, the objection says, cannot be a duty at all, and Carver's 31 employees have their own claims on the firm.

The objection is right that Carver is not at fault and that the cost is real. It is wrong that the cost makes the duty disappear. First, notification costs little: letters and calls to 640 households would cost under $5,000, and that part of the duty holds whatever happens to the rest. Second, the replacement offer can be shaped to what Carver can afford. Not every customer will accept; many units will be near the end of their life anyway; and the offer can be spread over three years as units fail. Carver's service manager estimates that about 40 percent of customers would accept a replacement in the first year, bringing the first-year cost to about $295,000, which Carver can finance. Third, Carver should press the manufacturer for a contribution, using the failure data it has gathered. The duty is to act in good faith within the firm's means, not to bankrupt the firm.

Stakeholders

Freeman (1984) described firms as answerable to every group that can influence them or that their actions touch. Carver's employees, its past customers and its owner are all affected here. Notifying customers protects the customers; the cost-limited offer protects the employees' jobs; and a public account of how Carver handled the problem protects the owner's most valuable asset, the trust of a local market in which most work comes by referral.

Conclusion

Carver should notify every affected customer and offer replacement at cost, financed over three years and pursued with the manufacturer. The obligation is ethical, not legal and not discretionary, because Carver knows of a foreseeable harm its own work helped create and its customers do not.

References

Carroll, A. B. (1991). The pyramid of corporate social responsibility: Toward the moral management of organizational stakeholders. Business Horizons, 34(4), 39-48. https://doi.org/10.1016/0007-6813(91)90005-G

Freeman, R. E. (1984). Strategic management: A stakeholder approach. Pitman.

Schwartz, M. S., & Carroll, A. B. (2003). Corporate social responsibility: A three-domain approach. Business Ethics Quarterly, 13(4), 503-530. https://doi.org/10.5840/beq200313435