A warranty is a promise to do something a certain way. In a building context, it is a promise to carry out the construction in a certain way. Warranties can be express terms or implied terms. Implied warranties aren’t necessarily written into a building contract but they still apply to the project.
They tend to cover the basics of the contractor’s obligations such as good faith and workmanship. Implied warranties for residential construction are provided in the Building Act 2004. If a warranty is given, the other party can rely on it.
The House of Lords has discussed what the criteria are for an implied term. The most basic criteria is whether the implied term is necessary - can the contract work without it? In the case of terms so fundamental as good workmanship, the answer is always yes, it is necessary. A contract cannot work without an assurance of good faith and workmanship in order to hold the Contractor to a standard and protect the interests of the Principal.
Terms won’t be implied if they are inconsistent with the express terms in a contract.
Good Workmanship
An implied term of some sort exists in every construction contract. A good example is good workmanship which will exist in every contract regardless of the express terms. This basically means that, by signing the contract, the Contractor has undertaken to carry out the work to an acceptable standard.
Therefore, if the works are not completed in a workmanlike manner, it will be a defects. This implied warranty includes an assurance that the Contractor will use quality goods, select appropriate and capable materials. However, this does carry an exception: if the Contractor has purchased the materials from a reputable dealer and is not guilty of any negligence, but something on the manufacture’s end has affected their quality.
Skill and Judgement
If the Principal makes the purpose of the project known to the Contractor and the works are the type that the Contractor regularly undertakes, which the Principal relies on, then there is an implied warranty that the works will be completed fit for that purpose.
Sufficiency of Contract
When a Contractor undertakes to do work according to drawings or plans in the contract, there is an implied warranty that they are able to complete those works. If they have signed off on the plans and the contract price and then claim that they are unable to complete the works, they will be liable in damages. If any additional work is needed, it must be carried out at the contractor’s expense for them to avoid liability.
For design and build contracts, the Contractor impliedly warrants it:
will exercise due skill, care and diligence when completing the project under the contract;
has examined the plans for the project and have satisfied itself they are suitable and adequate for the principals project requirements;
will do all of the works in the contract and when the works are are finished, they will comply with the requirements in the contract.
As always, there are a number of points wihch can alter the standard and warranty that the builder will be required to meet, it’s worth considering these in detail for any particular situation.