Warranties in Construction Litigation Disputes

The risk of construction litigation often begins with limited initial contracts. These are enforceable contracts; the parties agree on the scope and price of the work.  However, there generally are not clauses which address breach of contract issues as there are in most business litigation matters.  This does not mean that remedies do not exist. Instead, the statutory and common law of North Carolina dictates such solutions.  So what is the recourse for a breach of a proposal/contract in North Carolina?

Construction litigation warranties

Certain warranties, unless disclaimed, will be part of any agreement for a contractor to provide services to a property owner. Some of the warranties in play are as follows:

1. Merchantability: the product meets standards for ordinary purpose and usage.
2. Workmanship: the construction must be completed in a workmanlike manner and is sufficiently free of major defects.
3. Fitness for a Particular Purpose: If a buyer has relied on the seller’s skill and judgment to furnish suitable goods so that the product is used in a specific manner, they are entitled to rely upon that skill and judgment.
4. Habitability (for residences): The residence must be livable.
5. Not Delay Other Parties on the Project: for example an owner owes it to the general contractor, but the general contractor owes it to his subcontractors, and first tier subcontractors owe it to second tier subcontractors etc.

The contract can include a few other types of warranties. For example, a contractor who warrants that he will work on the project continually could be responsible for that promise.  A property owner may have relied on the promise of steady work to select that contractor over others.

Remember that if there is a dispute regarding construction quality, the contractor generally has a period to fix the problem before litigation. Generally, the performance must be significantly below an acceptable standard before the owner can terminate the worker, not pay them, and proceed to cure using another contractor.  These cases come down to who is responsible for the first uncured material breach.

We can help.

Contractors and homeowners: understand your cure rights and what warranties are part of your proposal/contracts.  If you have a construction contract dispute, contact Maginnis Law, PLLC.  Maginnis Law, PLLC is a Raleigh business litigation firm with civil lawyers practicing throughout the Triangle.  Contact the firm at 919.526.0450 for an initial consultation or through our contact page.