Redman Industries, Inc.

Text (OCR of the scan at left; may contain errors)

IN THE MATTER OF REDMAN INDUSTRIES, INC., ET AL.

CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket C- 0. Complaint, Mar. , 1.975 Decision, Mar. J, 1975 Consent order requiring a Dallas, Tex., manufacturer of mobile homes, among other things to cease unfair and deceptive warrd.nty prd.ctices through the establishment of a prompt and effective system to handle war.mty-related problems. The order requires respondent to provide ward.nty repairs or services on stil-unrepaired mobile homes manufactured between 1972 and 1974 and to provide future retail purchasers with relief by establishing and maintaining a regular and effective system to handle complaints and service. Under this system, all repairs must be complete within thirty days after notification to the respondent of defects. Where the defects affect safety or habitability of the mobile home, the repairs must be started within three business days and be expeditiously completed. Appeamnces For the Commission: Walter E. Diercks, Robert Weinstock and Pamela R. Stuart.

For the respondents: Jerry L. Buchnwyer, Thompson, Knight Sirnrnons Bullion Dallas, Tex.

Complaint 85 F.

COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act and by virtue of the authority vested in it by said Act, the Federal Trade Commission, having reason to believe that Redman Industries Inc., a corporation, and certain of its subsidiaries, (hereinafter referred to as respondents) have violated the provisions of said Act, and it appearing to the Commission that a proceeding hy it in respect thereof would he in the public interest, hereby issues its complaint stating its charges in that respect as follows:

PARAGRAPH 1. For the purposes of this complaint and the order attached hereto the term "mobile home" means a movable or portable dwelling over thirty two feet in body length and over "ight feet in width, constructed to be towed on its own chassis and designed so as to he installed with or without a permanent foundation for human occupancy as a residence, which may include one or more components which can he retracted for towing purposes and suhsequentIy expanded for additional capacity, or two or more units separately towable but designed to be joined into one integral unit. "Mobile home" as used herein includes the mobile home structure, including the plumbing, heating and electrical systems.

PAR. 2. Respondent Redman Industries, Inc. is a corporation organized, existing and. doing business under and by virtue of the laws of the State of Delaware, with its principal offce and place of business located at Redman Plaza East, 2550 Walnut Hill Lane, Dallas, Tex. Respondent Redman Mobile Homes, Inc. is a wholly-owned subsidiary corporation of Redman Industries, Inc., organied, existing and doing business under and by virtue of the laws of the State of Delaware, with its principal office and place of business located at Redman Plaza East, 2550 Walnut Hil Lane, Dallas, Tex. Respondent Redman Industries, Inc., dominates, controls, condones, approves and derives pecuniary benefits from the acts and practices of Redman Mobile Homes, Inc.

Respondent Redman Western Corporation is a wholly-owned subsidiary corporation of Redman Mobile Homes, Inc., organized existing and doing business under and hy virtue of the laws of the State of Delaware with its principal offce and place of business located at Redman Plaza East, 2550 Walnut Hil Lane, Dallas, Tex. Respondents Redman Industries, Inc. and Redman Mobile Homes, Inc. dominate control, condone and approve the acts and practices of Redman Western Corporation.

PAR. 3. Respondents are now and have been engaged in the design, manufacture, advertising, offering for sale, sale and distribution of 309 Complaint mobile homes to selected mobile home dealers. Manufacturing is accomplished in approximately 26 facilities controlled and operated hy respondents, located in approximately 14 states. PAR. 4. In the further course and conduct of their aforesaid business respondents are now and have been soliciting persons (individuals parnerships and corporations) to become "authorized" dealers, and are also solicited by persons who desire to become "authorized" dealers. Respondents select certain of these persons as "authorized" dealers. In the normal course of business respondents sell and distribute the aforesaid homes only to these " authorized" dealers who then resell these products to the public. In the normal course of business the way in which the aforesaid homes are purchased new at retail unused by a first purchaser is through an "authorized" dealer. PAR. 5. In the further course and conduct of their aforesaid business respondents place primary reliance on their Uauthorized" dealers to ascertain which of their aforesaid mobile homes contain defects which are suhject to the aforesaid warranty, and to notify respondents of defects for which respondents assume responsibilty. Respondents also place primary reliance on their "authorized" dealers to effect such repairs and services as arc necessary to correct defects covered by the aforesaid warranty and to notify respondents of those defects covered hy the aforesaid warranty which said dealers are unable or unwillng to fully correct, so that respondents may repair the aforesaid defects either directly with their own personnel or through the use of an independent service contractor.

PAR. 6. In the further course and conduct of their aforesaid business respondents now cause and have caused, their mobile homes to be transported to "authoried" dealers located in varous States of the United States and to be sold to retail purchasers by such dealers. Respondents therefore maintain and have maintained a substantial course of trade in said mobile homes in commerce, as "commerce" is defined in the Federal Trade Commission Act. PAR. 7. In the further course and conduct of their aforesaid business respondents are now, and have been, orally or in wrting, directly or through their dealers and others, granting or disseminating certain warranties or certain statements concernng their warnties to each retail purchaser of their aforesaid mobile homes by various means in commerce, as "commerce" is defined in the Federal Trade Commission Act.

(a) Each writt n warranty represents directly or by implication that respondents will fully correct and repair within a reasonable period of time all defects in the materials or worlaanship in each of their aforesaid mobile homes which become evident within a twelve month or Complaint RS F.

ninety day period (depending on the character of the defect) subsequent to the date of their purchase at retail, except for certain specifically enumerated components, including but not limited to furniture and certain major appliances. Respondents' wrtten warranty further represents that the aforesaid obligation is limited to repairing or replacing parts of their mobile homes which are returned to their nearest factory with transportation charges prepaid and which respondents shall determine to he defective, and that if it is impractical to send any part to the nearest factory, respondents shall have no liability for the lahor cost involved in the repair or replacement hut shan he liable solely for providing the necessary material for such repair or replacement.

Respondents' wrtten warranty further purports to disclaim an other warranty rights which are imposed by force of law, including but not limit.ed to the implied warranties of merchantabilty and fitness for a particular purpose, and represents directly or by implication that the aforesaid warranty sets forth the full extent of respondents' warranty ohligations.

(h) Notwithstanding ,he foregoing, it is respondents' uniformly applied warranty policy that the aforesaid service and repair of defects covered by the wrtten warranty wj) be provided at the mobile home site and that the return of the home, or the defective parts, as the case may be, with transportation charges prepaid is not a condition precedent to such performance.

PAR. 8. In the further course and conduct of their aforesaid business respondents have engaged in acts and practices which result in, and have resulted in, the failure to maintain an adequate, regular and effective system which assures that every retail purchaser of respondents' mobile homes in fact receives full servce and repair of defects covered by the aforesaid warranty within a reasonable time. Typical, but not inclusive of such acts and practices, are: (a) The dissemination of a written warranty as described in Paragraph Seven which fails to disclose the true nature and extent of purchasers' warranty rights and those warranty obligations which respondents in fact undertake in the normal course of business including but not limited to:

(1) the fact that pursuant to respondents' policies it is regarded as t.he "authorized" dealers' sole and complete responsibility, at least in the first instance, to perform repairs and service for certain classes of defects covered by the aforesaid warranty without compensation or reimbursement by respondents and without regular and effective action by respondents to determine whether such repairs and service arc in fact fully performed within a reasonable time. K$lJlVAN INlJU:STKlt INC. T AI..

309 Complaint (2) the representation, made directly or hy implication, that the aforesaid warranty is the sole legal warranty, that it legally excludes and disclaims all implied-in-Iaw warranties, and that said warranty states the sole legal remedy available to the purchaser, when in truth and in fact under the applicable law of several states in which respondents' homes are sold at retail such exclusions, disclaimers or limitations are unenforceable.

(3) the representation, made directly or by implication, that as a condition precedent to securing full performance by respondents of their warranty obligations every party to whom the warranty is offered must complete properly and mail to respondents a certain owner s registration card at the time he or she purchases said mobile home, when in truth and in fact respondents' internal policy is to provide such performance irrespective of whether the card has been (4) the representation made directly or by implication that as aretured.condition precedent to securing full performance by respondents of their warranty obligations every party to whom the warranty is offered must transport the defective par or if necessary the entire home to respondents' manufacturing plant, when in truth and in fact it is respondents' policy to provide such performance at the home site. (h) the failure to scrutinize, adequately evaluate and assure that all prospective dealers, prior to their "authorization" as described in Paragraph Four are competent to perform warranty service or have made adequate arrangements for perfonnng warranty service through independent contractors.

(c) the failure to scrutinize, adequately evaluate and assure that all authorized" dealers, either directly or by action through independent contractors, notify respondents of the existence of claims initiated by retail purchasers for warranty servce or for repair of defects covered hy the aforesaid warranty- (d) the failure to scrutinize, adequately evaluate and assure that all authorized" dealers, either directly or by action through independent contractors, in fact fully perform and complete within a rea. onable time all warranty service and repairs performed on behalf of respondents. (e) the failure to establish and maintain an effective and regular mechanism for the prompt and fair resolution of mobile home consumer complaints and rcquests for service and repairs relating to respondents' warranty or warranty policies- (I) the failure to scrutinize, adequately evaluate and assure that all prospective dealers, prior to their "authorization" as described in Paragraph Four, either directly or hy action through independent contractors, are competent to perform a thorough inspection of a ')89- 19'10- 76 - 21 ! Complaint 85 F .

mobile home prior to its tender to a retail customer to determine whether a home contains defects covered hy the aforesaid warranty. (g) the failure to scrutinize, adequately evaluate and assure that all authorized" dealers, either directly or by action through independent contractors, actually perform or assure the performance of a thorough inspection of a mobile home prior to its tender to a retail customer to determine whether a home contains defects covered by the aforesaid warranty.

(h) the failure to scrutinize, adequately evaluate and assure that all prospective dealers, prior to their "authorization" as described in Paragraph Four, either directly or by action through independent contractors, are competent to perform the installation setup" of the aforesaid mobile homes at the homesite selected by the retail purchaser.

(i) the failure to scrutinize, adequately evaluate and assure that all authorized" dealers, either directly or by action through independent contractors, actually and competently perform the installation or setup" of the aforesaid mobile homes.

(j) the failure to maintain an adequate and expert factory service capability or to make other provisions adequate to assure the full performance within a reasonable time of the repair of defects covered by the aforesaid warranty which respondents authorized" dealers are unwilling or unable to perform.

The aforesaid failure to maintain a regular and effective system which assures the full performance within a reasonable time of service and repair of defects covered hy the aforesaid warranty has the capacity or tendency to impede, delay or prevent the performance of said service and repairs for parties to whom the warranty is offered. PAR. 9. By and through the aforesaid acts and practices respondents have been and are now:

(a) Disseminating a warranty which fails to fully and completely inform purchasers as to the actual protection offered by respondents. (b) Failing to establish or maintain an effective or adequate system which assures that respondents wil fully correct or repair all defects covered by the aforesaid warranty within a reasonable time- The aforesaid acts and practices are deceptive and are in violation of Section 5 of the Federal Trade Commission Act. PAR. 10. By such failure to maintain a regular and effective system which assures that every pary to whom the warranty is provided will receive full performance within a reasonable time of the service and repair of defects covered hy the aforesaid warranty respondents have been and now are engaged in unfair acts or prdctices in commerce in violation of Section 5 of the Federal Trade Commission Act. 309 Decision and Order PAR. 11. Through the individual and cumulative acts and practices set forth in Paragraph 8(a) respondents are now and have been disseminating and causing the dissemination of a wrtten warranty which fails to fully and accurately describe the true nature and extent of the warranty rights of retail purchasers of respondents' mobile homes and those warranty ohligations which in fact respondents undertake in the normal course of business. Thus respondents have failed to disclose material facts which if known to consumers: (a) would be likely to affect their decision of whether to purchase one of respondents' mobile homes, and (b) would enable retail purchasers to understand the true nature and extent of their warranty rights and to secure performance of such warranty service.

Therefore, the aforesaid failures to disclose material facts are deceptive and unfair and are in violation of Section 5 of the Federal Trade Commission Act.

DECISION AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondents named in the caption hereof, and the respondents having been furished thereafter with a copy of a draft of complaint which the Bureau of Consumer Protection proposed to present to the Commission for its consideration and which if issued by the Commission, would charge respondents with violation ofthe Federal Trde Commission Act; and The respondents and counsel for the Commission having thereaftcr executed an agreement containing a consent order, an admission by the respondents of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signng of said agreement is for settlement purposes only and does not constitute an admission by respondents that the law has been violated as alleged in such complaint and waivers and other provisions as required by the Commission rules; and The Commission having thereafter considered the matter and having determined that it had reason to believe that the respondents have violated the said Act, and that complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of sixty (60) days, now in furher conformty with the procedure prescrihed in Section 2.34(h) of its rules, the Commission hereby issues its complaint, makes the following jurisdictional findings, and enters the following order:

1. Respondent Redman Industries, Inc. is a corporation organied Decision and Order 85 F.

existing and doing business under and by virtue of the laws of the State of Delaware, with its office and principal place of business located at Redman Plaza East, 2550 Walnut Hill Lane, Dallas, Tex. 2. Respondent Redman Mobile Homes, Inc. is a corporation organized, existing and doing business under and by virtue of the laws of the State of Delaware, with its offce and principal place of business located at Redman Plaza East, 2550 Walnut Hill Lane, Dallas, Tex. 3. Respondent Redman Western Corporation is a corporation organized, existing and doing business under and by virtue of the laws of the State of Delaware, with its offce and principal place of business located at Redman Plaza East, 2550 Walnut Hill Lane, Dallas, Tex. 4. The Federal Trade Commission has jurisdiction of the suhject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

ORDER 1. It is ordered That respondents shall within 90 days from the effective date of this order make a wrtten inquir of all known retail purchasers of respondents' mobile homes (except those specifically excluded below) built between July 1, 1972 and June 30, 1974, utiliing the form of letter shown in Appendix A attached :1ereto and made a par hereof which shall contain therein a self-addressed postage paid retur envelope, and which shall be mailed to such purchasers hy first class mail.

Known retail purchasers are defined as those IIrt purchasers at retail of said mobile homes who communicate with respondents no later than 60 days after the effective date of this order and those first retail purchasers whose names and addresses (1) are contained in company coach" or unit files and tire records (except that with respect to respondents' manufacturng plants which maintaned for the period July 1, 1972 to June 30, 1974 separate files for warranty registration cards the names and addresses of known retail purchasers may be established from such separate fies rather than hy reference to coach" or unit files), (2) are supplied by the Federal Trade Commission within 60 days of the effective date of this order or; (3) are supplied to respondents by respondents pa. and curent dealers in response to respondents' letter request for such infonnation sent by first class mail (which letters shall be sent no later than: o days after the effective date of this order) utiizing the form of letter shown in Appendix B attached hereto and made a par hereof and which shall contain therein a self-addressed postage paid return envelope. Notwithstanding the above, known retail purchasers shall not include:

REDMA)' INDUSTRIES, I).C., ET AL. 817 809 Decision and Order (a) local, State or Federal Governments or agencies thereof; (b) retail purchasers who are now or have been engaged in litigation 'With respondents involving their mobile home built by respondents durng the two year period set forth hereinabove; (c) retail purchasers whose homes \were sold to them on an "as is basis;

(d) retail purchasers who communicated directly with respondents corporate headquarters or its attorneys concerning a problem or defect in such purchaser s mobile home, where there is a record indicating a resolution of the problem to the purchaser s satisfaction; (e) retail purchasers whose names are supplied by past or curent dealers in response to respondents' wrtten inquiies set forth hereinabove when such names are received by respondents from a dealer more than sixty days after respondents' inquir was mailed to that dealer unless the purchaser or purchasers themselves communicate with respondents no later than 60 days after the effective date of this order, or the name or names of such purchaser or purcha..';;ers appear elsewhere in respondents' individual "coach" or unit files or tire records, (or where applicable, warranty registration card files) or were supplieJ to respondents by the Federal Trade Commission as set forth hereinabove;

(f) retail purchasers who live outside the United States or who purchased mobile homes from dealers located outside the United States;

(g) retail purchasers who are known to respondents to no longer own their mobile homes built by respondents, 2, It is further ordered That respondents shall, directly or through their dealers or other third paries, repair or servce within a reasonable time at the site of the home (in the normal coure not to exceed ninety days from the date on which the letter to a given retail purchaser referred to in order Paragraph 1 is returned and received by respondents) all defects and malfunctions in mobile homes produced by respondents durng the two year period referred to hereinabove which become known pursuant to order Paragraph 1 unless it is clear that a given defect or malfunction:

(a) is a result of improper setup of the mobile home; (b) is a result of improper use or abuse of the mobile home; (c) did not arise or become evident within the term of the warranty; (d) was brought to respondents' attention by a retail purchaser more than sixty days after respondents mailed the wrtten inquiry to such purchaser as provided hereinabove where the home was purchased by the I1lst retail purchaser more than one year prior to the effecti ve date of this order;

:J18 FEDERAL TRADE COMMISSION DECISIONS Decision and Order 85 F.

(e) is a minor cosmetic defect in a home purchased hy the first retail purchaser more than one year prior to the effective date of this order. 3. It is further ordered That respondents cease and desist from disseminating, or causing the dissemination of, offering or otherwse providing, in commerce, any express warranties to the retail purchasers of respondents' mobile homes ur:less respondents meet all of their obligations under such warranties within the time period standards set forth hereinbelow in order Paragraph 3(e) and establish and maintain a regular and effective system reasonahly designed to assure that every purchaser of the aforesaid mobile homes wil receive full performance hy respondents, directly or hy action through their dealers or other third parties, of all such warranty obligations within the said time period standards. This warranty performance system shall incorporate but not necessarily he limited to the following standards and terms: (a) Respondents shall disseminate a warranty and associated documents which clearly and fully describe and effectively communicate to the first retail purchaser:

(1) the identity and address of the warrantor; (2) the nature and extent of the warranty offered or otherwse provided;

(3) the remedies available to the purchaser under the warranty; (4) the manner in which respondents intend to provide for performance of their warranty obligations, including disclosure of any delegation of warranty responsihijity to third paries Provided however That disclosure of said delegation must be accompanied hy additional disclosure that such delegation in no way relieves respondents of the ultimate responsibility to fulfill all of respondents warranty obligations;

(5) any and all requirements which must in fact be fulfilled by the purchaser as a condition precedent to securng performance by respondents of their warranty ohligations;

(6) a uniform procedure to he followed by a purchaser in order to request performance by respondents of their warranty obligations; (7) a uniform procedure available to the purchaser for a systematic review and disposition of complaints and disputes with respect to the performance of respondents' warranty obligations by respondents manufacturing plants, subsidiaries, divisions, and other employees, or by respondents' dealers or other third paries. (b) Respondents shall cease and desist from selling their mobile homes without any express or implied warranty, as is " or with any disclaimer of implied warranties or limitations or exclusion of liability under any warranty or disseminating or causing the dissemination of any statement or representation which represents, directly or by 309 Decision and Order implication, that respondents have disclaimed any express or implied warranty or limited or excluded any liabilty under any warranty unless respondents have a reasonahle basis in the form of an opinion by legal counsel that said disclaimers, limitations and exclusions are enforceable under governing state law, and clear and conspicuous notice of said " " sale or other said disclaimer, limitation or exclusion is given to prospective retail purchasers of their mobile homes prior to the execution of the contract of retail purchase. A clear and conspicuous notice of an "as is" sale shall contain the following language: NOTICE:

The manufacturer of this mobile home sells it "as is" and refuses to assume any responsibility for defects. The purchaser of this mobile home must accept it with all dp.fects and take the entire risk, under contract law, a.c; to its condition. Pr01rided however That with respect to: (a) the "as is" sale of damaged, salvaged, demonstrator or repossessed mobile homes, (b) the sale of mobile homes where respondents disclaim or fail to grant an express warranty on appliances which are covered by a separate written warranty by a supplier or manufacturer other than respondents, and (c) the "as is" sale of mobile homes to local, State and Federal Governments or agencies thereof, the aforesaid opinion by legal counsel shall not be required.

(c) All of respondents' warranty service and repair obligations performed subsequent to the tender of the home to the retail purchaser shall be rendered hy respondents, directly or through their dealers or other third parties, at the site of the mobile home. (d) Where respondents delegate, assign, contract or otherwise rely on a continuing basis upon any dealers or any other persons not employees of respondents to:

(i) determine whether any mobile home manufactured by respondents contains defects which are within the scope of a warranty extended by respondents or otherwse requires remcdial action pursuant to said warranty;

(ii) notify respondents of the existence of those circumstances enumerated in subparagraph (d)(i) above; or (ill) perform any repairs or otherwise provide services in satisfaction of any warranty obligations incurred by respondents, respondents shall beginning within 120 days of the effective date of this order, assure that if a dispute or disagreement should arise between respondents and one or more of said. dealers or other third persons as to which of them is to incur any such duty, burden or responsibility with respect to warranty repairs and service or is to correct a malfunction related or alleged to relate to setup of the aforesaid mobile homes, any and all (:) 320 n:DERAL TRADE COMMISSION DECISIONS Decision and Order 85 F.

necessary repairs or other corrective action wil be expeditiously provided (in the normal course of business) in a manner consistent with this order, regardless of whether the said dispute or disagreement has been resolved. The "normal course of business" does not include: (1) conditions under which abnormal demands are made upon service capabilities as a result of natural disasters, other acts of God or the government (including the effects of remedial action required of respondents as set forth in order Paragraphs 1 and 2, above), or any other event beyond the control of respondents and their dealers which places an unusually large demand upon servce facilities; (2) conditions resulting from disasters, strikes, acts of the government, instances of force majeure or other similar occUIen es which are beyond the control of respondents and their dealers and which prevent respondents and their dealers from responding to service requests within the time periods stated hereinhelow; (3) slight omissions or deviations from the terms of this order which are inadvertent, unintentional, and not due to bad faith of respondents; (e)(l) Respondents shall, beginning within 120 days of the effective date of this order, directly or through their dealers or other third parties, commence, in the normal course of business as set forth in order Paragraph 3(d) above, all warranty service or repairs of defects giving rise to a condition which affects the safety of a mobile home or renders it substantially uninhabitable, as soon as possible but in no event later than three business days following receipt of notice of such defect hy respondents from the retail purchaser, or two business days following notice of the determnation made by respondents' dealer pursuant to order Paragraph 3(i)(3)(iii) below, and shall complete such service or repairs expeditiously.

(2) Respondents shall, except as set forth in order Paragraph 3(e)(1) above, beginning within 120 days of the effective date of this order directly or through their dealers or other third parties, in the normal course of business, as set forth in order Paragraph 3(d) above: (a) respond to notice of the need for warranty service or repais within a reasonable time not to exceed seven business days of receipt of said notice by respondents or their dealers and (b) complete said service or repairs within a reasonahle time not to exceed thirty days following said receipt of notice.

Provided, however That in the event of a bona fide dispute between respondents or their dealers and a retail purchaser requiring resolution through the procedure established pursuant to order Paragraph 3(m) below, as to whether the defect(s) complained of hy the retail purchaser are or are not covered by respondents' warranty, then: In the event it is determined that warranty service or repair is .

r.d_.JIUl' VUoJIH.l'- , 11 '-J HI",. 309 Decision and Order required, which determination shall he made promptly, respondents shall be allowed, in the normal course of business as set forth in order Paragraph 3(d) above, from the date of notification of the dispute as set forth in this subparagraph (e)(3) no more than three business days in the case of defects referred to in subparagraph (e)(I) above to commence service or repair (such repairs to be completed expeditiously), and no more than thirty days in the case of defects referred to in subparagraph (e)(2) ahove to complete service or repair. (f) Respondents shall, except as provided in order Paragraph 3(h) below, in the normal course of business as set forth in order Paragraph 3(d) ahove, beginning within 120 days of the effective date of this order inspect at the home site, directly or through their dealers or other third parties, each mobile home prior to or at the time of tender of possession to the retail purchaser to assure that the home is being delivered to such purchaser free of all ascertainable defects and is properly setup, except for deficiencies which do not affect the home s safety or habitability, which shall be noted in the owner-dealer final delivery checklist (Appendix C), and which shall he then remedied in accordance with subparagraph (e)(2) above.

(g) Respondents shall, except as provided in order Paragraph 3(h) helow, in the normal course of business as set forth in order Paragraph 3(d) ahove, beginning within 120 days of the effective date of this order reinspect, directly or through their dealers or other third paries, each mobile home on or about sixty days after tender of possession to the retail purchaser to determine the existence of and to correct or arrange for the correction of any defects, covered by respondents' warranty, in the mobile home, or improper setup and problems arising therefrom. Results of each of the inspections required in order Paragrphs 3(f) and 3(g) hereinahove will be documented in a report or reports which shall he required to be signed hy respondents' dealer and if possible by the retail purchaser or said purchaser's representative, indicating agreement with the information set forth therein. The reports documenting the results of the aforesaid inspections shall be in the formats set forth in Appendices C and D attached hereto, or in formats substantially eqilvalent thereto.

(h) If the retail purchaser elects to provide for the setup of his mobile home himself, then in such cases the responsibility of respondents and their dealers for transportation, setup, inspection and reinspection, as set forth in subparagraphs (f and (g) above, shall terminate with the delivery or tender of possession to the retail purchaser or his agent or representative.

(i) Where respondents delegate, assign, contract or otherwse rely on a continuing basis upon any dealers to perform the duties set forth in 322 FEDjoRAL TRADE COMMISSION DECISIONS Decision and Order 85 F.T.C. order Paragraph 3(d) above, respondents shall enter into written contractual agreements with such dealers which: (I) adequately and accurately describe the scope of those duties to be horne hy said dealers as aforesaid, as well as the responsibility for properly setting up respondents' mobile homes; (2) establish the duty of the dealer in the normal course of business as set forth in this order Paragraph 3(i) to provide respondents with the name and address of each retail purchaser and the date of each purchase;

(3) (i) establish the duty of the dealer in the normal course of business as set forth in this order Paragraph 3(i), to commence all warranty service, or repair of defects, giving rise to a condition which affects the safety of a mobile home or renders it substantially uninhahitable as soon as possible hut in no event later than three business days following receipt by the dealer of notice of such defect or condition and to complete such service or repairs expeditiously; (ii) establish the duty of the dealer in the normal course of business as set forth in this order Paragraph 3(i), to complete all other warranty service or repairs within a reasonable time, not to exceed thirty days following receipt by the dealer of notice of such condition; (iii) set forth that the requirements of subparagraph (i)(3)(i) and (i)(3)(ii) ahove shall apply only to those cases in which the dealer responds to and completes the service or repairs himself. In those ca. in which the dealer determines to rely upon respondents to perform or to complete service or repairs requested by retail purchasers under: (a) subparagraph (i)(3)(i) above, such determination shall be made and communicated to respondents as soon as possible but in no event later than two business days after dealer s receipt of notice from the retail purchaser.

(b) subparagraph (i)(3)(ii) above, such determnation shall he made and communicated to respondents as soon as possible but in no event later than five business days after the dealer s receipt of notice from the retail purchaser.

(4) establish the duty of the dealer in the normal course of business as set forth in this order Paragraph 3(i) to inspect each mobile home prior to or at the time of tender of possession to the retail purchaser as set forth in order Paragraph 3(f), except as provided in subparagraph (h) above, to assure that the home is being delivered to such purchaser free of all ascertainable defects and is properly set up, ex"ept for deficiencies which do not affect the home s safety or hahitability which shall he noted in the owner-dealer final delivery checklist (Appendix C) and which shall then be remedied in accordance with subparagraph (i)(3)(ii) immediately above.

RElJMAN INDUSTRIES, INC., ET AL. B23 B09 Decision and Order (5) establish the duty of the dealer in the normal course of business as set forth in this order Paragraph 3(i) except as provided in subparagraph (h) above to reinspect each mobile home on or about sixty days after tender of possession to the retail purchaser to determine the existence of and to correct or arrange for the correction of any defects in the mobile home covered by respondents' warranty or improper setup and problems arising therefrom; (6) establish the duty of the dealer in the normal course of business as set forth in this order Paragraph 3(i) to provide respondents with reports which wil document the results of the inspections set forth in (4) and (5) immediately above and which wil be signed by respondents dealer and if possible hy the retail purchaser or said retail purchaser representative indicating agreement with the information set forth therein;

(7) provide for a procedure which assures that if a dispute or disagreement should arise between respondents and one or more of said dealers as to which of them is to incur any such duty, burden or responsibilty or is to correct an improper initial setup or a malfunction arising therefrom, any and all necessar repairs or other corrective action will he expeditiously provided, regardless of whether the said dispute or disagreement has been resolved;

(8) establish the duty of the dealer to maintain or contract for adequate service personnel and facilities;

(9) set forth service responsibilities in the event of termination of a dealer with respect to homes stil under warranty or in the possession of the dealer and not yet sold to a retail purchaser at the time of termnation;

(10) set forth the right of respondents to withdraw authorization from dealers failng to meet their responsibilties under the agreement. Existing dealers authorized hy respondents as of the effective date of this order shall execute such agreements (which agreements shall be immediately effective) within IRO days of the effective date of this order, or shall be terminated by respondents. Other dealers authoried by respondents later than the effective date of this order shall execute such agreements at the time of their authorition. Such agreement shall be in the format set forth in Appendix E attached hereto or in a format substantially equivalent hereto. The "normal course of business" as used in this order Paragraph 3(i) shall not include: (1) conditions under which ahnormal demands are made upon service capabilities as a result of natural disasters, other acts of God or the government, or any other event beyond the control of the dealer which places an unusually large demand upon the dealer service facilities; (2) conditions resulting from disasters, strikes, acts of 324 FEDERAL TRAD(. COMMISSION DECISIONS Decision and Order 85 F.

the government, instances of force majeure or other OCCUlTences which are beyond the control of the dealer which prevent the dealer from responding to service requests within the time periods stated hereinahove; (3) slight omissions or deviations from the terms of this order subparagraph which are inadvertent, unintentional and not due to bad faith of the dealer.

(j) Respondents shall send a questionnaire (using the format set forth in Appendix F attached hereto or in a format substantially equivalent thereto) to all persons other than "as is" purchasers who after the effective date of this order purchase at retail respondents' mobile homes which inquires as to:

(1) the existence of any defects in said mobile homes covered hy respondents' wan-anty or improper setup or problems arising therefrom;

(2) whether the retail purchaser notified anyone of such defects or setup problems, and if so who was notified and when did such notification take place;

(3) the identity of any person who sought to service such defects or setup problems;

(4) whether such defects or setup problems were fully rep:rred, the period of time required to effect such repairs, and the identity of the parties who accomplished such repairs;

(5) whether the retail purchaser is satisfied with the promptness and quality of the repair.

Such questionnaire in the form of a postage paid self-addressed post card or a letter containing a postage paid self-addressed envelope, shall be sent between sixty and ninety days subsequent to the tender of possession of the home to the retail purchaser. (k) Where respondents delegate, assigt, contract or otherwse rely on a continuing basis upon any dealer or any other persons not employees of respondents to perform any of the responsibilities or duties set forth in order Paragraph 3(d) hereinabove, respondents shall fully evaluate the level of expertise and physical and personnel resources of such dealers or other persons with respect to the abilty to inspect, repair service and setup all mobile homes manufactured by respondents prior to such delegation or reliance to assure that all said persons are capable of performing said responsibilties or have provided for such performance through a third party having such capability, in accordance with the standards set forth herein.

Respondents shall in addition regularly review and evaluate the manner in which such persons, directly or through another third party, perform the aforesaid responsibilties and maintain their service capabilities and shall withdraw said reliance and authorization from ___, . ., .. .

u_--.----. -- - ___n :J09 Decision and Order persons failing to meet those responsibilities or the standards set forth herein.

(I) The direct administration of respondents' warranty service program at the corporate level and the responsibility for supervising and assuring implementation of the warranty service program shall beginning within 120 days of the effective date of this order, be vested in only those corporate officials who have no direct responsibilities on a day-to-day basis for the sale of respondents' mobile homes. The person or persons to whom the responsibilty for supervising and assuring the implementation of the program is delegated shall make periodic reports at least on a monthly basis to respondents' responsible officers which shall include current information concerning: (1) the current cost to respondents of warranty service; (2) the incidence and nature of frequently recurrng defects; (3) those measures undertaken in response to reports of frequently recurng defects including hut not limited to modification in production and design of respondents' mobile homes; (4) analysis of the manner in which respondents' employees, dealers and other third parties are performing warranty and setup responsibilties.

(m) Respondents shall, beginning within 120 days of the effective date of this order, establish a uniorm procedure for the systematic receipt and analysis and fair disposition of all complaints or disputes which may arise between the aforesaid retail purchasers of respondents' mobile homes and respondoents or respondents' dealers or other third parties, regarding any alleged warranty ohlig"dtions of respondents.

Such procedure shall incorporate but not necessarily be limited to: (1) prompt evaluation and response hy respondents to all complaints within a reasonable time not to exceed five business days after receipt hy respondents;

(2) the desiguation of a single focal point within the corporation for the receipt of said complaints;

(3) an effective mechanism for the fai and imparial resolution of such disputes hy corporate level personnel not responsible for sales on a day-to-day basis;

(4) an accurate and complete record keeping system regarding the nature and disposition of all such disputes and complaints received by respondents; .

(5) periodic review and evaluation hy respondents of the effectiveness of such procedures and correction of such procedures where necessary .

326 FEmmAL TRADE COMMISSION DECISIONS Decision and Order H5 FTC.

(n) Respondents shall, beginning within 120 days of the effective date of this order, maintain full and adequate records which disclose: (1) the date of receipt, disposition and the date of disposition of each request for warranty service (including any refusal to accept a request and the reason for such refusal) received hy respondents; and (2) the results of the evaluation of service capacity provided for in order Paragraph 3(k) above.

4. It is further ordered That respondents shah forthwith distribute a copy of this order to each of their operating divisions or manufacturing plants engaged in the manufacture, offering for sale, sale, and distribution of mobile homes.

5. It is furtlwr ordered That respondents notify the Commission at least 30 days prior to any proposed change in the corporate respondents such as dissolution, assignment . or sale resulting in the emergence of a successor corporation, or any other change in the corporations which may affect compliance obligations arising out of this order.

6. It is furtlwr ordered That respondents shall, at intervals of 9, 18 and 24 months following the effective date of this order, fie with the Cqmmission a report, in writing, setting forth in detail the manner and form in which they have complied with this order. Such reports shall include but not be limited to the periodic reports submitted to respondents' responsible offcers descrihed in order Paragraph 3(1) above.

7. It is further ordered That respondents shall furish to the Commission nine months after the effective date of this order, a report which discloses the dates and manner in which dealers and retail purchasers were contacted pursuant to the procedures described in order Paragraph 1 ahove, and the dates and manner in which dealers and retail purchasers acted in response thereto and the dates and manner in which respondents acted in response to allegations by retail purchasers which purported to create an ohligation on the part of respondents under the terms of order Paragraph 2 above. Respondents shall for a period of two years after the effective date of this order maintain records which are adequate to disclose respondents' compliance with order Paragraphs I and 2, in order that such records may he furnished by respondents to the Federal Trade Commssion upon reques 8. It is further ordered That respondents shah submit to the Federal Trade Commission for its review copies of any proposed substantial revisions in the questionnaire required pursuant to order Paragraph 3U), the dealer agreement required pursuant to order Paragraph 3(i), and the warranty documents described in order , .

309 Decision and Order Paragraph 3(a), at least 60 days prior to the proposed effective date of any such revisions. Such submissions wil be required for the three years following the effective date of this order. APPENDIX A (Date) Dear Mobile. Home Owner:

Thank you for purchasing one of Redman s family of mobile homes. Our homes are waranted to he free from defects in material and workmanship. Any repairs required by your warranty should have been performed in full by the dealer who sold you your home , if this was not possible, by the factory which manufactured it. Through the following questionnaire, we are seeking to determine your experience with regard to servce so that we may be sure you have received full performance of warranty obligations. Y ollr response to the following questions wil enable us to provide you with the warranty service to which you are entitled.

Please r( spond to the following questions and rdurn thjs letter in the enclosed postage-paid envelope.

(l)(a) Have you experienced problems with your mobile home that you feel are covered by our warr.mty described above (check one) yes (l)(b) If the answer to (l)(a) is yes, please tell us when the problems occurred and describe them (2) If you have experienced problems that you feel are covered by our wan-nty, please advise us of wfwrn you contacted and when the contact was made. (3)(a) If you contacted someone reg-.Jrding a warranty problem, wa.', the problem corrected (check one) yes (3)(h) If the answer to 3(a) wa., yes, please indicate haw long it took to correct the problem, and wlw perfonTed the repair:

3(c) If the answer to :1(a) was No, docs the problem stil exist (check one: yes (d) If the answer to (c) wa.o; Yes, please describe the curent condition of the problem and any attempts at correction you have made: 4(a) If wan-nty servce wa.o; provided, were you satisfied with (1) the promptness of repairs (check one) yes no (2) the quality and completeness of repars(check one) _yes _ 4(b) If your answer to 4(a)(2) wa.o; No, does the problem which wa.o; the subject of waITnty service stil exist (check one): _yes _ 4(c) If your answer to 4(b) was yes, please explain and describe the CUITent condition of the problem and any attempts at. correction you have made: Sea) Who performed the set-up or im;talJation of your mobile home? (Name) (relationship) dealer, park operator, independent contractor, etc. (location) 5(b) Ha... there been any doubt or dispute as to whether a problem you have experienced with you mobile home wa... a problem covered by your warr.Jnty or due to improper set-up or instalation (check one) _yes _ 5(c) If the answer to Fi(h) was Yes, does the problem stil exist (cheek one): --yes 5(d) If the answer to S(c) was Yes, please describe the current condition of the problem and any attempts you have made to get the problem eorrcted: 5(e) Are you satisfied with the manner in which your mobile home wa... set-up or installed (check one): _yes _ :J28 FEDERAL TRADE COMMISSION DECISIONS Decision and Order 85 F.

(6) Please advise us of any suggestions that you might have that will enable us to increa.o;e the quality, utilty, and value that we strive to build into our homes. Note: Below is your nam( and address as they appear in our records, if there is need for a cOITection, please make it in the space provided. Also we ask that you supply us with your telephone number in the space provided as it will facilitate our reaching you to discuss any problems with our product or service that you have pointed out: (Name of Customer) (Street address) (City, State, Zip) telephone number (including area code):

We thank you for responding- to the questions set forth above. Please return this letter to us in the enclosed postage paid envelope. Sincerely, APPENDIX B Letters to Dealers Requesting Names and Addresses of Past Purcha.o;ers Dear Pursuant to an agreement with the Federal Tra Com'/Iiss1:on Redman Industries is securing from each of its present and former dealers all names and addresses of retail purchasers of its mobiles homes built between July I , 1972 and .June 30, 1974, identified with Dealer Serial Numbers submission of these names and addresses is necessarthroughsince warranty registration cards fail to provide the information for a substantial number of homes. Please fill in the names and addresses of the retail purchasers of these units and serial numbers of the homes and return this letter in the postage paid envelope provided before 1974, as called for by the above agreement. Signed Plant Generdl Manager Serial Numbers Names and Addresses ,. ,, .,.. ., ..,.,,,,,,;;\,..,,.,,. \;,. ( ,,,:: ,., , ,,.; q,. .,;; ,, .;;., . ,. ;; : :: , ,,,,,.,,.,,j.., ,. p,.,,,,,,, .,,,,,.,,;;,,, ,,,,,..,,,,,,. ,,,.,,, . . , :J09 Decision and Order RFDMAN MOBILE HOMES, IN dv Pre-Occupancy Check Ollt S.,i.INo lJ'.1nn Name ManciNo D."'erNarne Add'ess Cit Slate lip:- Pho e Number,: A/C Date Unit DH".,ed to Retail Purcn."e,_ Retail Purch..er s Name Add,ess City 5t.I.:- lip Phone Numb.r: AIC ( i': )I:;. :i;; :'dr :;l :lp :L ;:i ,,,,,..,,, ""'dbu' "n';nD'OnOh"vn;",",;,.NIAlnbl,,", LP NATURAL GAS"D Oil SHTn,s ElECTR'CAlS'Sn..5: """"',, n.., c"..."",a..lw, "".,S"ow"'",I,,,,,. 001"'000"'_" '""",,' r: L,."".oo", c....-. "".,nA""." (J P.,," "".,"opod,I,"o"" od. ,no''''"'' ".'P;P,o"'y".m ,"u" Il Doo'""oh' boo,""","'''''"''''"" II1'. , '00 AM\' DC;,,,,,, "'0"'.' ,,",- 0"'""""'.",'o..d ","P''",," LOOAMP,OaAMr. 11 "o", Pull, ,,,' wi" mo.'" o' ,H''''''' ;O" m ". ''''m,,\N()TE.lo",' .", 'V-10m ". hQmo cod.'''''''''0'''" now'" ,,, ..;oho,,' "n","m;o"". "U "',n,'..,oc' . H;""" ',to"-- U '-,".. D""", No"".o"""b'o'""ud.". Th' '"dH"d.."..'odAdiu""",,'o' o'''.''",. ''comp,", Sc,",.p""""" EO."", .ho..,ngah"""vjnV,..""..""""".'"'.""';""0"0',..,'h," '"" ',,,h,, "0 1 ""' o'o" 1'.""""'0, IJ , l;,.o'o"", "'0'. 'D" ,"n ,o,ho, n''' l fP''''''"' '"",I'yol.",'D"'h w"' 'eo""'othan ,"d "'P'''"'. CO",""". W,m\o.. Clo,;",.. C""k" and f,",oS "","00'''''0,,,''01'",,..,,",W"o,.." p,w.'o'o, """",. ,,"u ;'D,,., "ooB.'o,.b","","O."O'"' I 51",",1'""\0'" 11 Clo,";, ,,,,,,,. , ""'0.""". of S,.. (I ";'" "''',',\''"' "od rJ "'.""01'""" ' Pu"h. "" ..", o""".0,..,,,.0 "NICE, CH"" 11 A"Co",;\,O"" cI."''od hO",'e vmp."J';""?,,-,. ,tlo\ "qu'red d"o '" ,,,.1''''.w"" ",,"'., 0, "001"","" ,,,,",., ,od"o""",""dK","U,...n'. r: P.'''"''''O' ooer,""",.1 ",," ",,''" "'"n".' ""'or", .., ,ho.'. N,," II C.""""",,po,., ""'\"'o,,,, ..r,,. ,'a"o",a"" "0' , ,"""CO Il D..h..""., , ""or Il ",'o,.".h""O'''o. m... a"o".,o" d""".., '0'. ""'0'0""'" "Kh\ and ,n p'.c. ".'I,,,'odo,o,"o,,,"" IlCJ "'''D'''''',,,L"'orf,", ,"'''h.''",". ''''.''orSw,''h.. o"'b, ;".o'opo,l,..e,.d. (J D';pC",,,ov.".\."o,Doo" L:Q '''',,'u'L;o'''' 'umac.,P"""ndll,,,n.,) ( E''','''odo"'''J'o..a"d';'..,,, ,o,.., (:1 ,u,"" ''".nd liu""'1 CJ R'"O' "' II E".,,"'Roc.o'acl. ,,,.,", Bu,",,) J W'odw U Wa'" H.a"'!P"o,."" 'I E""'O'L.gM, :: r,..D,,,, U R,,"All II Co",p.C\o' (I ,-,.""",.",WATEII SYSn'5' :1 V,"" ',.,h Wa'" ,,,'a.. T,;", U So,"," "no ,"".. D.'''. Lo''/lM,.".d Suppl, "'".. CouO",..".hA".mh', U Wa'" H.ot ..,"",." A.lo, tJ ""00", I"IJ 1;,,, ",,\ o 1'." "".,,". Show", D,., 8a' IJ "a"' 0' O , ",eo.,; Mo;"to DC..,,,,, "co.,,,d",,,d_900"" rJU T"p' "d, .n" r: COP,"' D.""'"d Man"r","", rJ GaroV.I.. "M" f",,,"u,. 1'"""" o 'M" u. Il To",'SOoo'."drank 0'"'''''''''' Ll """;""";oDow"S,,,o' IJ D,,'nGo,...odCoo",,\;OM il "0' 1'".. n 8""0""""'"""" CI E.,o"w."oow' r: S,.,,,,.5",,w"/S'." L'M",o" LJ e,o",".., S,"om,- DauOI, W'd. The above p'e. occupancy chock oul/'",pechon re'luirc",enh a d obl'f;.bon ,!","e been performed byr " De.1lerand 'h;5 "fur ;,com;de,ed by Ihe Dealer.1nd Purch..", 10 be con1ple'ely hab;table. stable. and accepl.ble!o'dcl'YCrytotheH"la,IPurcl,a,e, un Ih;, d.le 5-;"" '. 0' D", ""iho"'M ".p",., Si;;", '-P;;;;. 0". r;p.--'P"n'fuIPN.m.o'A-- i.;. '-,ip n""," 0'1'""."

OlS''''BUTlDNOF n' HI' ARTtop.. YHLOW- R",,,'P,,,,h.,,,Cop, R.d,'''''Cu", 1""" - 0.0","o, Bg- 799 0 - 70 - 22 ;;. . ;;. ;;__.; : ; ,: , , ; ;;;; Decision and Order 85 F.

APPl;NDIX 0 Redman Mobile HOMf:S , INC.

Post.Occupancy Check Oul SC'ri 1 rlo. (-rillul N.lme MnolclNo Dcal'r f\amc' .

Address"

Ci\y: StiJlc:.__ Zip: Phone Number Ale ltc Unit DclivNCd to Rclilil Purchilscr Dati' ot Post- Occupancy Chcckcut:

Rct d P",cI'.laser s Nath Address:- Cily' Slate Zip: PhOTW Number: A/C ( !Oll1er Dealu I p,,for (rlo"" art' on! (h . VJimlnwc nr'\ b; di'1e) Exterior DoorfldlU5lrm' nt (r1Qors notdr"p- i;lg. fits properly, fllIsh;lnd no wind around hingcs) Interior Door Adjustment (m stn he.lrcum, second and third bedrooms) Water COOllections (ki\chrn. lMth, lilv;l\()ries) Plumbillp- COllrlf'ctiOIiS (commodes) Customer flilly und rslands how to prop()rly light furnace lor seasonal variation. Moulding Cabinet Door and DraVl rs check d (or f)rop!'r adjustments Or-.in Lines (sewer connections) Hot Water Heater Roof Other Tile ahove post- occuf1ancy hils bren performed by the de ler or au!llOrized representative and found tobe satis lactory with the Retail PurchLiser on this dilte. D;;;;; p"'.n'.' Da,. ;o," D.,. ;;i- D... Di""""',,,nu ' HlRr( r H r",,"

\" ,., CopypIN """'" Lwy 309 Decision and Order APPENDIX E REDMAN MOBILE HOMES, INC.

Dealer Service Agreement warrants that (Dealer) had the facilities to properly check out, deliver, set up, and service (or has contracted with an established servicing agency approved by Redman Mobile Homes, Inc.) Redman homes. The Dealer agrees that it wiIJ:

1. Assume responsibility for properly setting up those Redman homes sold to retail purchasers, unless the retail purchaser elects to provide for the set up of the home himself.

2. Provide each retail purcha.o;er with a copy of the Redman warranty before execution of the retail sale contract, and provide Redman with a completed warmnty card stating the name and address of each retail purchaser and the date of purchase. (a) Where a defect in a Redman home affects the safety of the home, or makes it substantially uninhabitable, commence warranty service as soon as possibleJn the normal course of business, hut in no event . later than three business days following receipt of notice of such defect, and complete such repairs expeditiously. (b) Complete all waITaoty servce, other than that specified in subparagraph 3(a) above, within a reasonable time in the normal coure of business, not to exceed thirty days following receipt of the service request. (c) The "normal coure of business" shall not include conditions which place an unusually large demand upon service facilities, such as disasters, strikes, acts of God or of the government, instances of force majeure or other occurrence which are beyond the control of Dealer which prevent Dealer from responding to servce requests within the time periods stated in subparagrphs :3(a) and :3(b) above. 4. Where a defect exists in a Redman home which is beyond Dealer's ability to repair or which Dealer will not repair within the time periods stated in subparagraphs 3(a) and 3(b) above, inform Redman of such defect no later than five business days after receipt of the servce request, and if the defect affects the safety of the home, or makes it substantially uninhabitable, infonn Redman of such defect no later than two business days after receipt of the service request.

f). Perform preoccupancy check out and make necessary adjustments and repairs a. Per Redman Mobile Homes, Inc. preoccupancy check out which is attached hereto as Exhibit A, unless the retail purcha.o;er elects to provide for the set up of the home himself. Dealer shall not knowingly deliver possession of a Redman home with any defect that affects the safety of the home or renders it substaally uninhabitable. 6. Perform the post-ocupancy check-Qut and make necessa adjustments and rf'pairs as per Redma Mobile Homes, Inc. post-ocupancy check-Qut, which is attached hereto as Exhibit B, approximately sixty days after acceptace of the home by the retail purchaser, unless the retail purchaser elected to provide for the set up of the home himself.

7. Provide Redman with reports signed by Dealer (Dr other representative) and the retail purchaser, if possible, reg-.aing the inspetions set forth in pargrphs 5 and above.

8. Where a defect or malfunction of a Redman home exists, and a dispute arises between Redman and Dealer as to whether Dealer wi be reimburd for the repa of such defect or malfunction, necessa repairs will be performed expeitiously by Dealer as provided under Pard.grd.ph 3 above, with the dispute to be resolved subsequently. 9. Maintain or contract for servce personnel and facilties which, in Redman , :132 FJoDERAL TRAlm COMMISSION DECISIONS Decision and Order 85 F.T. rea."ionable judgment, are adequate to check out, deliver, set up, and ervjce Redman Homes.

10. In the event -of termination of the dealership, provide the same warr.mty service as would otherwt;e be provided, on Redman homes ;3til under warrd.nty or no yet sold to retail purchasers.

Redman Mobile Homes, Inc., agrees that it will: 1. Pay to Dealer $40.00 for a single-wide and $50.00 for a double-wide within thirty days after receipt of preoccupancy check-out sheet signed by Dealer and signed and accepted by the retail purchaser, as outlined in paragrdphs I) and 7 above. 2. Pay Dealer $60.00 for a single-wide and $100.00 for a double-wide within thirty days after receipt of postoccupancy check-out sheet signed by Dealer and signed and accepted by the retail purchaser, as outlined in paragrphs 6 and 7 above. 3. Reimburse Dealer for all warrdnty service perfonTed by Dealer under the standard Redman Mobile Homes, Inc., warranty, if Dealer requests and obtains prior authorization of sucr. warranty service in accordance with Redman warranty service procedures. As used in this Agreement war.mty service" includes the folloV'ting items: (i) defective or broken rafters or side-wall studs; (ij) leaks in water lines in the floor; (iii) short circuits and open circuits in the walls; (iv) defects in the design of the mob le home; (v) breaks or defects in the mobile home chassis; (vi) major repairs to applicances, which wil be the ultimate responsibility of Redman s appliance vendors; (vii) major manufacturing defects resulting in structural failure; (viii) other major manufacturing defects which do not result from delivery or set-up, which require the removal or application of luterior or exterior wall, floor, or ceiling covering, or repairs to the chassis of 2. character similar to those listed above. Dealer understands that it is to pcrfonn minor adjustments and repairs to Redman homes without reimbursement other than the payments provided in paragraphs 1 and 2 immediately above, and such minor adjustments and repairs shall be the sole responsibilty of Dealer. This Agreement applies only to homes delivered after the execution date of the Agreement. This Agreement niay be termnated by either pary giving thirty days written notice; however, the commitments made by each pary hereto will apply to all homes delivered prior to the tennnation of the Agreement. Dealer understands Redman s intention to tenninate the Dealership upon failure to meet Dealer responsibilities under this Agreement.

In witness whereof, the parties have duly executed this Agreement as of the date and year listed below.

REDMAN MOBILJo HOMI-:S, INC. DEALER: (Name of Dealership) By Title: By Title:

Witness WitnessDate: (PlantDate:wi! Xerox copies and distribute as follows: Plant Dealer C. O. Credit Dept.) APPENDIX F' Dear Homeowrer:

For more than years Redman Industries ha.-, manufactured quality, low cost mobile homes. Our records indicate that in you purchased a Redman produced mobile home Serial No. Your home is warnted to be free from defects in material and workmnship for one year from the date of original purchase. If a defect comes to your attention during this time period, the dealer who sold you the home should be contacted. In most cases, he will 33.3 Decigion and Order be able to correct the problem. If the dealer is unable to make the cOITection, he is required to notify the manufacturer who will then assist in resolving the matter. In order for us to determine if you have been satistied with your home, we request you respond to the following questions (if you need more space, please attach a separate page):

0) Have you experienced any problems with your home that you feel are covered by our warranty or arise from the improper setup or installation of your home? (2) If so, whom did you notify of these defects or setup problems (if any) and when did notification occur? ) Were these problems satisfactorily resolved? (4) Do you have any suggf stions that would be useful to us in improving our prtuct for future customers? It would be greatly appreciated if you would respond to the above questions and return this letter in the enclosed postage paid envelope. We thank you in advance for your help in this matter. Sincerely, National Quality Assur-.mce Manager