Breach of Implied Contract
The real estate and construction defect litigators at Mark Anchor Albert and Associates are readily familiar with claims for breach of express warranties.
Construction and redevelopment contracts and other contracts involving real property typically contain warranties regarding various matters, including and without limitation, the quality of workmanship required or the conditions of the property. An express warranty is an affirmation of fact or promise made by the seller to a buyer that relates to the items sold and becomes part of the basis of the bargain. See Cal. Uniform Comm. Code § 2313. In the construction industry, in particular, an express warranty is a promise, statement, or representation regarding the character or quality of work, goods, or services which becomes a part of the contracted-for bargain. A seller’s obligation to a buyer for breach of warranty is one of strict liability. Basin Oil Co. v. Baash-Ross Tool Co. (1954) 125 Cal.App.2d 578, 596 (where a breach of warranty is established, liability is imposed entirely independent of the question of negligence by the seller).
In the construction litigation context, the contract, contract specifications, and architectural drawings will typically contain references about the quality of the construction materials and components being utilized. Too often, general contractors naively think that a specific express warranty provision in the contract, such as, “one year,” is the only express warranty made. Repair warranties have been deemed to be in addition to, and not in lieu of, defect-free warranty obligations regarding the quality of the finished project.
“A warranty relates to the title, character, quality, identity, or condition of the goods. The purpose of the law of warranty is to determine what it is that the seller has in essence agreed to sell.” Keith v. Buchanan (1985) 173 Cal. App. 3d 13, 20. “A warranty is a contractual term concerning some aspect of the sale, such as title to the goods, or their quality or quantity.” 4 Witkin, Summary of California Law (10th ed. 2005) Sales, § 51.
For example, AIA Document A201, “General Conditions of the Contract for Construction” (1987 ed.), provides the following express warranties at section 3.5.1:
“The Contractor warrants to the Owner and Architect that materials and equipment furnished under the Contract will be of good quality and new unless otherwise required or permitted by the Contract Documents, that the Work will be free from defects not inherent in the quality required or permitted, and that the Work will conform with the requirements of the Contract Documents. Work not conforming to these requirements, including substitutions not properly approved and authorized, may be considered defective. The Contractor’s warranty excludes remedy for damage or defect caused by abuse, modifications not executed by the Contractor, improper or insufficient maintenance, improper operation, or normal wear and tear under normal usage. If required by the Architect, the Contractor shall furnish satisfactory evidence as to the kind and quality of materials and equipment.”
AIA Document A201 also contains an express repair warranty, sometimes called a “callback” warranty, at section 12.2.2:
“If, within one year after the date of Substantial Completion of the Work or designated portion thereof, ... any of the Work is found to be not in accordance with the requirements of the contract Documents, the Contractor shall correct it promptly after receipt of written notice from the Owner to do so unless the Owner has previously given the Contractor a written acceptance of such condition. This period of one year shall be extended with respect to portions of the Work first performed after Substantial Completion by the period of time between Substantial Completion and the actual performance of the Work. This obligation under this Subparagraph 12.2.2 shall survive acceptance of the Work under the Contract and termination of the Contract. The Owner shall give such notice promptly after discovery of the condition.”
This provision as a practical matter contains the remedy for a breach of a one-year, no-defect warranty: the contractor warrants that the project will be free from defects for one year, but if any such defects do develop during that time, the contractor will return to the project to repair them.