Every construction contract includes warranties.  Some warranties are written into the contract expressly, while other warranties are implied by law.  Whether the warranty is express or implied, each warranty can lead to liability for a party to the contract if the warranty is breached in some way.  This article will highlight some of the major warranties involved in construction contracting, with reference to those express warranties appearing in the AIA Document A201 – 2007 General Conditions of the Construction (“A201”).

Express Warranties

Call-Back Warranty:  A201 Section 12.2.2.1

When most construction lawyers hear the term “warranty” in a construction contract, invariably their mind goes immediately to the call-back warranty set forth in A201 § 12.2.2.1.  This warranty provides the Owner with the opportunity to provide written notice to the Contractor that certain work does not conform to the contract documents and, per the contract, the Contractor is required to correct the nonconforming work.  The nonconforming work must be discovered within one year of the date of Substantial Completion. 

Should the Contractor fail to correct the work within a reasonable time, then the Owner may correct the nonconforming work in the manner set forth in A201 § 2.4.  The Owner may provide as many written notices as are necessary to cover all work that fails to meet the requirements of the contract documents.  Indeed, to make sure that the Owner does not waive its rights of recovery, the Owner must provide multiple written notices even if the Contractor fails to perform corrective work for one notice.

General Warranty:  A201 Section 3.5

A201 § 3.5 contains three basic warranties and representations that the Contractor provides to the Owner regarding the materials and work provided for the project.  As the A201 makes clear by express reference, the general warranty is not limited in any way by the call-back warranty set forth in A201 § 12.2.2.1 (the call-back warranty discussed above).  The call-back warranty is merely a remedy available to the Owner in addition to – and not in place of – the general representations contained in A201 § 3.5.

1. Warranting the Quality of Materials

The first general express warranty provides the Contractor will use only new materials and equipment to construct the project – that the materials will be “of good quality and new unless the Contract Documents require or permit otherwise.”  In other words, unless the Owner and Architect have allowed the Contractor to reuse certain equipment (perhaps in a renovation) or incorporate used equipment or materials, every item incorporated into the work will be new. 

2. Warranting the Work’s Conformance to the Contract Documents 

The second general express warranty contained in A201 § 3.5 provides that the Contractor expressly warrants that its work conforms with the requirements of the Contract Documents.  While this may sound mundane, keep in mind that the Contract Documents include both the project drawings and specifications.  In some situations, the specifications will impose performance requirements for certain building systems. 

For example, a curtain wall installer for a high-rise building may have specifications set forth as to how the window system is required to perform.  Generally, architects do not have the expertise necessary to design a window system for such high rises, so the curtain wall installer will be required to design and build the window system in accordance with the building code and with any additional requirements imposed by the specifications – perhaps requiring additional protection for lower levels of the building due to hurricane wind loads.

3. Warranting the Work Is Free of Defects

The final general express warranty contained in A201 § 3.5 provides that the Contractor warrants its work “will be free from defects, except for those inherent in the quality of the Work the Contract Documents require or permit.”  This warranty is often the basis for breach of contract and warranty actions when defective work appears after the one-year call-back warranty has expired. 

Other Express Warranties

Depending on the nature of a project, other express warranties may be contained in the contract outside of the general conditions to the contract.  For instance, performance specifications for a wastewater treatment plant might require the contractor to provide a warranty or guarantee that the plant will be able to process thirty million gallons of water a day and fifty million gallons of water at peak times.  If the plant cannot meet these requirements, then an action for breach of warranty may be appropriate.

Implied Warranties

While the availability of certain implied warranties may vary from state to state, it is generally true that the implied warranties contained in a construction contract are in addition to the express warranties set forth in the contract.  Two important implied warranties are discussed below.

Implied Warranty of Information Provided to the Contractor

One of the most fundamental warranties in construction is the Spearin doctrine, named for the seminal United States Supreme Court decision in United States v. Spearin, 248 U.S. 132 (1918).  The Spearin doctrine holds that the owner of any construction project impliedly warrants that the information, plans, and specifications being provided to the contractor are sufficient to build the project.  In other words, if the contractor constructs the project in strict accordance with the plans and specifications provided by the owner, then the contractor cannot be held liable if any loss or damage results.

In the context of a design-build project, this warranty might be the responsibility of the contractor and applied to those designs provided by the contractor.  Even in a design-build scenario, however, any information the owner has provided on which the contractor is relying may be sufficient to establish a Spearin claim.

Implied Warranty of Good Workmanship

Even with a written contract spelling out certain warranties regarding the quality of work, the law in some states provides that an owner still may rely on the contractor’s implied warranty to perform its work in a diligent and reasonably skillful workmanlike manner.  Such an implied warranty may come into play in situations where a contractual warranty may no longer apply – perhaps because the contractual warranty required notice to be provided and no such notice was given.  Alternatively, this implied warranty may fill a gap when the parties fail to have a written contract or to expressly address warranty issues in their contract. 

Conclusion

Warranty claims can help an owner recover against a contractor in some situations where other claims, such as a breach of contract claim or a negligent construction claim, cannot be asserted for various reasons.  In cases of defective designs, a warranty claim can help the contractor to recover from the owner for additional costs incurred.  In either case, it is important for a construction lawyer to be aware of warranty issues.