Your mechanic should be the one telling them it is defective. The ball joint is a metal ball that sits in a teflon cup, it is lubricated with some type of grease, eventually the grease dries out and the metal ball wears on the teflon cup, this is the squeak. If you use some method to relubricate it as deliriousga did you should be ok. If you continue to drive with it in this state the metal ball wears away the cup, now the part is damaged and is likely the source of the 'clunk' you hear. You now have significant play in the rear suspension which can cause geometry changes under cornering, braking acceleration etc. This makes the car dangerous to drive. If you continue to drive it in this state the part will fail and cause major damage when the ball joint fails and the wheel tries to part company with the car.
Ask the company if they are prepared to pay for a major law suit after the part fails and you suffer injury from the accident caused by their failure to replace a worn out part.
Todd
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