Yes, a liver shunt is definitely a life threatening congenital condition. This is a good example of why it is so important to follow Dr. Center's recommendation and have a bile acids test done before bringing any Yorkie puppy home from the breeder.
The problem with your health guarantee is the breeder is not responsible for any vet bills including tests done to determine the condition. The only thing you are entitled to is a replacement puppy which is emotionally next to impossible, I'm sure.
There is no clause in any health contract that binds a breeder to retiring any dogs who pass on genetic conditions. This is what determines how ethical/responsible a breeder is. Some voluntarily step up and cover vet bills and remove the parents from their breeding program. Others simply keep on producing puppies and pass the problems onto unsuspecting buyers with a clause in their contract freeing them from financial responsibility.
