Construction Warranties and Guarantees: A Primer
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Construction Warranties and Guarantees: A Primer
David A. Senter
Warranty issues occur
every day for the construction
practitioner-from contract
drafting to claim resolution.
This article identifies and
defines the significant express
warranties commonly found
in construction agreements.1
An express warranty repre-
sents an assurance by one con-
tracting party of a fact upon
which the other party may
David A. Senter rely.2 Whether considered col-
lateral thereto or an integral
part thereof, a warranty forms an element of a contract of sale.'
The obligation arising under a warranty is that of an undertak-
ing or promise that the goods [or services] shall be as repre-
sented or, more specifically, a contract of indemnity against
loss by reason of defects therein .... The effect of an express
warranty undoubtedly is to bind the seller absolutely for the
existence of the warranted qualities.'
An action on an express warranty requires that the
defendant made the warranty, the defendant's performance
did not comply with the warranty, and injury proximately
resulted from the defendant's failure to perform as warrant-
ed.5 Express warranties can be created orally or in writing,
but oral warranties often suffer from proof problems. Also,
if such warranties are made before the contract is signed,
then a merger clause and the parol evidence rule could bar
proof of the warranty.6
When analyzing any warranty issue, one of the first
questions to consider is whether or not the Uniform
Commercial Code (UCC) applies to the transaction. The
UCC governs only the sale of goods and not the rendering
of services.' Sounds easy, but the difficulty arises when the
required performance includes both goods and services.
Most courts follow the predominant factor test and apply
the UCC to the entire transaction, even the services, if the
transaction mainly concerns the sale of goods.8
Form Contracts
A plethora of case law exists over whether certain words
or conduct rise to the level of an express warranty. Suffice it
to say that all of the construction industry's form docu-
ments include express warranties with regard to services
and goods. In Article 3.5.1 of the American Institute of
Architects (AIA) Document A201 (1997 ed.) (A201), the
contractor warrants that the materials and equipment will
David A. Senter is a lawyer with the firm of Adams
Kleemeier Hagan Hannah & Fouts PLLC, in Greensboro,
North Carolina.
be of good quality and new, that the work will be free from
defects, and that the work will conform to the requirements
of the contract. Similar language is found in Article 4.5.1 of
A401, Standard Form of Agreement Between Contractor
and Subcontractor. Article 3.12 of A201 addresses the sub-
mission of shop drawings, product data, and samples, all of
which may give rise to express warranties, as well as war-
ranty limitations and disclaimers from suppliers.
The Associated General Contractors of America (AGC)
Document No. 200 (2000 ed.) (AGC 200) similarly pro-
vides warranties that materials and equipment will be new,
of good quality, and free from defective materials and
workmanship and that the work will be free from material
defects.9 It further states that the contractor shall obtain
from its subcontractors and material suppliers any special
or extended warranties required by the agreement and listed
in an exhibit to it.10 The contractor's liability for such war-
ranties is limited to the one-year correction period, after
which time they are assigned to the owner to enforce with
reasonable assistance from the contractor.I
The Construction Owners Association of America
(COAA) has published a relatively new set of contract doc-
uments: COAA Document No. B-100GC, Contract for
Construction, Chapter 1, Builder's Agreement (2000) (B-
100GC); and COAA Document No. B-200GC, Contract for
Construction, Chapter 2, Builder's Required Services and
General Terms and Conditions (2000) (B-200GC). These
documents are loaded with contractor warranties regarding
services and materials. The contractor warrants that the
materials, inter alia, will be new; conform to the specifica-
tions, descriptions, instructions, drawings, data, and sam-
ples; be merchantable; and be free from defects (all of
which add to suppliers' and manufacturers' warranties as
may be required by the contract documents).12 It further
provides for a one-year warranty to correct, that all of the
work and materials will comply with the contract docu-
ments, and that subcontractor/supplier warranties comply
with the contract documents and run to the benefit of the
owner, as well as the general contractor.
These form contracts, in varying levels of detail, set
forth warranties of goods and workmanship by the contrac-
tor and attempt to give the owner the express benefit of any
warranties issued by subcontractors or suppliers. Obviously,
any other assurances contained in the contract documents
(not all of which are raised in this article), in particular the
specifications, may represent enforceable express war-
ranties. Such warranties and assurances with regard to
goods are governed by the UCC.
The UCC
Under section 2-313(1) of the UCC, any affirmation of
fact or promise, description of the goods, or sample or
THE CONSTRUCTION LAWYER
Winter 2003](ViewImageLocal?handle=hein.journals/conlaw23&div=10&collection=&method=preview&ext=.png&size=3)
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Construction Warranties and Guarantees: A Primer
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