Implied Obligations in Construction Contracts

Date: November 13, 2012  /  Author: John P. Ahlers  /  Categories: Damages, Construction News and Notes, Contracting, Government Contracts  /  Comments (0)  /  Back to Blog

In addition to the contract clauses governing the relationship between an owner and general contractor (or general contractor and subcontractor), some of an owner's more important obligations are implied obligations (obligations that are not contained in the contract, but implied by courts, arbitration panels and dispute review boards).  Certain obligations have been consistently found to be implied in the functions the owner is typically expected to perform on a construction project.  These are, among others:

  • Implied warranty of the plans and specifications;
  • Implied duty not to hinder or delay;
  • Implied duty to provide access to the site;
  • Implied duty to coordinate multiple prime contractors or subcontractors;
  • Implied duty to provide adequate supervision;
  • Implied duty of good faith and fair dealing;
  • Implied duty to ensure a safe workplace. 

In a series of blog articles we will discuss the implied obligations as they pertain to owners, general contractors and subcontractors. 

IMPLIED WARRANTY OF THE PLANS AND SPECIFICATIONS 

A. Implied Warranty Of The Plans And Specifications. 

A basic principle of construction law is that one who furnishes plans and specifications for a project impliedly warrants that the plans and specifications are workable and sufficient.[1]   A long line of Washington cases has recognized this rule.[2]

1.  Owner's Implied Warranty.

It is well-settled law that the owner warrants the adequacy and sufficiency of the contract documents.  If the contractor is bound to build according to plans and specifications prepared by the owner, the contractor will not be responsible for the consequences of defects in the plans or specifications.[3]  Rather, there is an implied warranty that the contract documents are adequate and sufficient to build the project.[4] This doctrine, referred to as the "Spearin" doctrine, has been adopted in Washington, Oregon, Alaska and most other states.[5] 

For example, in Dyad Construction,[6] design issues arose concerning the location of a proposed sewer line.  The design, which was deemed impractical, dangerous, and expensive, caused such severe problems that the contractor was forced to stop work.  Ultimately, after the state safety inspector confirmed the design was unsafe and needed to be redone, completion of the project was delayed by four months.  In evaluating the contractor's claim for damages, the Appellate Court ruled,

[t]he factual situation in this case dictates that the contractor will be awarded damages as well as being permitted to an extension of time for performance.  The delay was not contemplated by the parties at the time of entering the contract, the delay was unreasonable in duration, and it resulted, in part, from the active interference of the owner [breach of the implied warranty of adequacy and sufficiency of the plans and specifications] with the work of the contractor.[7]  

To invoke the implied warranty of adequate design plans and specifications, the contractor must demonstrate that the contract documents were defective.  The contractor need not demonstrate that the design falls below some professional standard, which is generally a higher burden, the contractor need only prevail on the breach of the implied warranty.  The contractor is only required to demonstrate that the contract documents contain inconsistencies, are ambiguous or otherwise insufficient to build the project by. 

2.  Prime Contractor's Implied Warranty.

A prime contractor, though generally not the drafter of the construction document, can nevertheless be accountable for the implied warranty which attaches to plans and specifications. In Hoye v. Century Bldrs.,[8] the Washington Supreme Court stated: 

[I]f a party furnishes specifications and plans for a contractor to follow in a construction job, he thereby impliedly warrants their sufficiency for the purpose in view.

The court in Hoye went on to state:

Where either party to a building contract agrees to furnish, and does furnish, the plans for a building, he thereby guarantees their sufficiency for the purpose.[9] 

In Haley v. Brady,[10] subcontractors brought an action against the general contractor for extra work done in lathing and plastering of two buildings.  The extra work performed was not provided for in the plans and specifications. In awarding damages for the costs of extra work, the court held: 

Additional compensation may be recovered for extra work which becomes necessary because the building cannot be constructed according to the plans and specifications furnished, as required by the contract, such as for alterations rendered necessary by defective plans; or for additional work or expense which is rendered necessary by the owner's negligence, or failure to perform his part of the contract.[11]

A prime contractor, like the owner may thus also impliedly warrant the plans and specifications provided to the subcontractor.[12]  The courts have reasoned that the prime may in turn sue the owner, shifting the risk of loss from the lesser culpable party back up the contractual chain of privity.  

In subsequent articles, other implied warranties will be addressed. 

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[1]  United States v. Spearin, 248 U.S. 132, 169 (1918); Ericksen v. Edmonds School Dist. No. 15, 13 Wn.2d 398,

408, 121 P.2d 275 (1942); Weston v. New Bethel Baptist Church, 23 Wn. App. 747, 753, 698 P.2d 411 (1978).

[2]   Weston v. New Bethel Baptist Church, 23 Wn. App. 747, 753, 698 P.2d 411 (1978).

[3]   United States v. Spearin, 238 U.S. 132, 136 (1918).  

[4]   Id. 

[5]   See Dravo Corp. v. Municipality of Metropolitan Seattle, 79 Wn.2d 214, 218, 484 P.2d 399 (1971); City of Seattle v. Dyad Const., 17 Wn. App. 501, 565 P.2d 423 (1977); A.H. Barbour & Son, Inc. v. State Highway Com., 248 Or. 247, 257-258, 433 P.2d 817 (1967); Gen. Constr. Co. v. Oregon Fish Com., 26 Or. App. 577, 581-582, 554 P.2d 135 (1976); Fairbanks N. Star Bor. v. Kandik, 795 P.2d 793, 797 (1990). 

[6]   Dyad Construction, 17 Wn. App. at 503.

[7]   Id. at 519. 

[8]   52 Wn.2d 830, 833, 329 P.2d 474 (1958).

[9]   Id. at 833.

[10]   17 Wn.2d 775, 137 P.2d 505 (1943).

[11]   Id. at 788 89.

[12]   Miller v. Guy H  Jones Constr. Co., 653 P.2d 211 (Okla. Ct. App. 1982).


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