15 Sep 2016

This is the third and final article in our series on warranties in construction contracts. So far, we have looked at two essential but often overlooked features of product or workmanship warranties, being:


(a)    their nature as contractually binding promises; and


(b)   their risk-shifting function.


In this third and final part of our series on warranties, we consider other ways in which the law deals with claims by owners and head contractors for the losses suffered by defects in the workmanship and/or materials supplied by construction contractors.


First, there is the duty implied by law in all construction contracts to perform construction works to a proper and workmanlike standard.  Construction works which fall below this standard will be treated as a breach of the construction contract and dealt with in a way that is similar to breaches of warranty.


There is also the general law of negligence that imposes a duty on suppliers of workmanship and materials.  That duty is to ensure that the labour and material that is supplied at each stage in the contracting and supply chains does not cause reasonably foreseeable personal injury, property damage, or, in most construction-related cases (with some limited exceptions), financial losses.


Where the defects are hidden from view, these duties may still be owed after (sometimes, a long time after), the warranty period in relation to the same defects has expired.  Also, since this duty applies universally (with certain limited exceptions that only rarely apply in  a construction context), a properly formulated case in negligence may in appropriate cases leave less room for argument about where the duty starts and ends and whether it applies to the specific defects in question.


There is, in addition, a range of statutory duties that apply to those who supply labour and materials outside of an employment context (as construction contractors do).  Some of these statutory duties apply specifically to construction works (or even more specifically to home building works) whilst others apply generally to consumer supplies (or even more generally to supplies of goods and services for a price).  Depending on the circumstances of the relevant supply, these statutory duties may, in a construction context, include:


          the duty to perform home building works in a proper and proficient manner (which is virtually the same as the duty of proper and workmanlike performance implied by law into construction contracts but may be subject to different limitation periods and in some cases, different remedies); and


          the duty  to supply materials that are fit for sale (or “merchantable”), fit and safe to be used for their intended purpose and having the same quality and features as any  sample shown to the buyer or description given to the buyer, before the sale.


These duties may correspond or partially overlap, in their scope and content, with the contractual and general law remedies.  However, there may also be differences in how long you have to enforce your rights or the remedies that are available to you for breaches of these duties.  For example, you may have both a general law and a statutory right to be compensated for a latent (hidden) defect that you did not discover until the warranty period ended, but to be compensated for it under the general law, you would have to prove that the defect was caused by the builder’s negligent failure to take reasonable care in carrying out the defective works, whereas to recover under the statute you would only need to prove that the works were (for whatever reason) defective.


The  point is that your rights and obligations are not confined to the terms of any product or workmanship warranty, the law in this area is not “one size fits all”, and even long after a builder’s or manufacturer’s warranty has expired, you may still have other enforceable legal rights available to you.


HHG Legal Group’s construction law and commercial litigation lawyers have the skill and expertise to advise contractors and suppliers about their rights and obligations under builders’ and manufacturers’ warranties and the best ways to deal with claims for faulty or defective workmanship or material supplies. 

This is general information only, and does not constitute specific legal advice. If you would like further information in relation to this matter or other legal matters please contact Daniel Morris or Murray Thornhill Freecall 1800 609 945 or email us now. 

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