Interpretation ID: nht74-5.1

DATE: 02/15/74

FROM: AUTHOR UNAVAILABLE; Lawrence R. Schneider; NHTSA

TO: Open Road Industries Inc.

TITLE: FMVSR INTERPRETATION

TEXT: We have received correspondence from Mr. & Mrs. William D. Waterhouse of Homestead, Florida, concerning the recall campaign in which their 1970 Open Road motor home is involved (NHTSA campaign #73-0043). Mr. and Mrs. Waterhouse object to the indemnity and hold-harmless provision which you have required them to agree to in order for your company to repair their vehicle without charge to them. That provision reads;

The undersigned will save and hold Open Road Industries, Inc. harmless from and indemnify it against any and all claims, actions, causes of action and damages it may suffer or sustain by reason of making said repair and alteration.

Our records indicate that the recall in question was initiated on March 12, 1972. Accordingly, regulations applicable to the owner notification letter (49 CFR Part 577) do not apply, as these regulations first became effective March 26, 1973.

We wish to inform you, however, in the event Open Road Industries finds it necessary to conduct notification campaigns in the future, that we would not consider a notification letter such as this to conform to Part 577. We believe the hold harmless and indemnity provision is a charge to the purchaser beyond what is standard business practice in these matters. While no money is demanded,

the legal rights which your company demands be relinquished are not without monetary value, and may, as in the case of the Waterhouses, influence the purchaser's decision as to whether the manufacturer should be entrusted to make the repair. While this agency has no authority to compel manufacturers to repair defective vehicles, or to prevent manufacturers from making repairs subject to conditions, it does require through Part 577 that specific information regarding defective vehicles be provided to purchasers. That information is required to be more extensive when the manufacturer does not perform the repair free of charge to the purchaser. Consequently, future notification letters sent by Open Road which include these or similar hold-harmless or indeminity provisions must specify the measures to be taken to repair the defect in accordance with @ 577.4(e)(3), which deals with those cases where the manufacturer does not bear the cost of repair.