Refining Your Construction Contracts – Part 2: Warranties
Date Posted: July 20, 2015
Posted In: Ideas, White Papers,
by Joseph C. Blanner, Esq.
McCarthy, Leonard & Kaemmerer, LC
If you provide a warranty for the work, labor and/or materials that you furnish on a project, you need to make sure that your warranty provision deals with the following issues:
(1) Length of the Warranty. Warranty provisions should clearly indicate the length of the warranty and indicate when the warranty time begins to run. From the contractor’s perspective, it is best to commence the running of the warranty upon the completion of that portion of work that is being warranted. One way to put that would be, “for a period of [length of warranty] from the date of beneficial use or substantial completion of the equipment or that portion of the Work in question…” Be sure to keep track of when this occurs during the course of a project so that you can document when the warranty period began to run.
(2) Liability under the Warranty. What happens does the warranty require if a portion of the work is defective? The warranty provision can govern what corrective work must be performed if the work, or any portion of the work, is defective. Generally, it is going to cost the contractor less to repair or replace the defective work than to allow a third-party to perform the work. If you are the party warranting the work, it is advisable to be in control of what work is performed. A provision giving the contractor the discretion to make and determine the scope of the repairs is as follows, “[Contractor]’s sole liability hereunder shall be to repair promptly or replace defective equipment or materials, at [contractor]’s option and at [contractor]’s expense.”
(3) Limitations to the Warranty. Warranty provisions should exclude warranty claims that arise from abuse, lack of maintenance or other similar conditions. For this reason, a provision should be included, such as the following: “[Contractor]’s warranty excludes remedy for damage or defect caused by abuse, modifications not executed by [contractor], improper or insufficient maintenance or improper operation.” Warranty provisions should also indicate that the written warranty is the exclusive warranty being provided and that the contractor disclaims all other warranties, whether written or oral, including warranties of merchantability and fitness for a particular purpose.
Please note that the contents of a specific warranty provision may need to be tailored to the work that is being performed. As such, I would recommend that you have an attorney that is familiar with construction contracts review your warranty provision to ensure that it is not overly broad and fits your specific needs.
Please let me know if you have any questions or comments concerning the foregoing. I can be reached at jblanner@mlklaw.com.