Cody Schneider | Peckar & Abramson
Q. We completed a large commercial office project a few years ago, and defects are emerging with multiple trades. Their contractual warranties were for a year. Is there any way to force them back to correct their work even though we are past the year?
A. Even though the one year time frame for the express warranties in the contracts appears to have passed, there are still other potential avenues to pursue in order to get such work repaired.
First, these defects likely constitute breaches of the contract and as such, you can demand that the trades remedy these contractual breaches through corrections to their work or face liability for the cost of the repairs and potential additional damages like attorneys’ fees, etc.
Second, there are likely implied warranties associated with their work, such as the implied warranty for good and workmanlike performance. Such implied warranties typically extend beyond one year and as such, can serve as a basis to demand repairs when available and applicable even if the one year express warranties have expired. Notably, the mere existence of an express warranty, like the one year warranties noted here, does not automatically result in implied warranties being waived.
Finally, depending on whether the damages caused by the defects extend beyond the scope of the trades’ work, and potential exception to the Economic Loss Rule, you may assert they were negligent in performance of their work and request that they address the damages caused by their work as well as correct the work itself to ensure no further damages are caused.
Q. As general contractors, under what conditions, if any, are we liable for our subcontractors’ defects?
A. Because general contractors are typically the face of projects for owners, developers and others, you will likely confront claims for liability based on your subcontractor’s defects. Ultimately, if your subcontractor caused the defects, they should be held responsible for the damages. However, it can be a long, hard and costly road to get them to be held responsible for such defects.
But this is where good contract drafting can help because if you have the proper indemnity and/or insurance requirements with your subcontractors. you can improve your chances that you are better protected and insulated earlier from such liability risks due to the subcontractor’s defects.
Nevertheless, if you receive a notice asserting you are liable for claims related to defects with your subcontractors’ work, it is wise to get into contact with a lawyer who is an expert in construction law to navigate these potential claims and help assist you enforce your various rights and preserve your defenses under your contracts and the applicable law.
Q. Our drywall firm is taking on a project for a new (to us) general contractor. In the past, we have always given a one-year warranty for our work, but this customer is asking for three years. Are we obligated to give them a warranty period this long?
A. Generally speaking, no, you are not obligated to agree to an express warranty for longer than you are comfortable providing. However, your firm should weigh the risks of extending the warranty beyond your typical one year versus the benefit of that project and/or customer. To the extent you are comfortable providing an extended warranty, try to negotiate further compensation for the additional exposure you may be taking on, if any.
Further, because the warranty will be for a longer period of time than you typically provide, consider having your attorney modify the warranty language to specifically tailor and limit the scope of the warranty to the situation the customer wants to address so that you may limit the scope of your exposure from a warranty that extends over a longer period of time.
Q. Our general construction firm completed a multifamily project, which is suffering from water intrusion because of windows that our window sub installed incorrectly. The rain that came through caused significant damage, and the owner is worried about mold. Can we hire someone to repair drywall, replace flooring, et cetera and then bill the window sub? The sub wants to repair/hire their own companies to repair these things.
A. To use a favorite but dreaded line among us lawyers, “it depends.” You need to look at your contract with the window sub to see what may be required or permitted in this situation. You may be required to provide your window sub notice and an opportunity to cure such defects and repair such damages before you hire someone else.
However, because the damage goes beyond the work performed by the window sub. it may go beyond the scope of the notice and cure provision in the contract. Furthermore, depending on the extent of the water intrusion, and/or if there is actual mold or risk of mold, the repairs may need to occur more quickly than the notice and cure period provided under your contract with the window sub due to possible health and safety concerns.
Additionally, if one is contained in your contract with the window sub, an indemnity may provide an avenue for you to have such damages repaired and then request reimbursement from the window sub.
When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.