To address negligent work, usually the first remedy is a warranty claim. Warranties are often provided in construction contracts, by manufacturers, and implied in common law. It is critical for owners and contractors to be aware of these various forms of relief.
Many construction contracts provide an explicit warranty requiring the contractor to fix defective workmanship. This is especially true in residential building contracts. These warranties benefit both parties. The contractor controls the costs to remedy the defect. The owner usually receives a quick response. However, not all conflicts are avoided. The warranties only last for a finite period of time, after which the contractor typically refuses to perform. There are strict notice requirements. And not everyone sings the same tune regarding the adequacy of the remediation work. Even so, pursuing warranty claims is typically the quickest path toward resolution.
In addition to a contractor's warranty, there are often warranties for materials and equipment. For example, new windows, roofing materials, and appliances all usually come with warranties from the manufacturer. These warranties can be quite lengthy and transferred from person to person. Some windows carry 40-year warranties. Roofing materials are typically covered for 20 years. If the material is defective or a part fails, a warranty claim to the manufacturer might resolve the issue. However, it is typically not that simple. There are a few loopholes built into the warranties. Sometimes the product must be registered for the warranty to take effect. And then there are ways the warranty can be voided, for reasons such as "misuse or improper maintenance." There is an entire body of law arising out of the Uniform Commercial Code that governs the parameters of warranty claims. Manufacturers often attempt to overreach. Denials of warranty claims should be reviewed, especially if the amount at issue is significant.
Even when there is not an express, written warranty, the law implies warranties in the construction context. For instance, every new residential construction project is protected by an implied warranty of habitability. This applies to any residential property. The home must be fit for human habitation. While this is seemingly obvious, the implied warranty does become relevant more than it should. For instance, if winter is approaching and there is no heat in the home or the structure is not yet dried in, this warranty could apply. The implied warranty of merchantability, again imposed by the UCC and many state laws, requires that a material be fit for the ordinary purpose for which it was intended to be used. And finally, the implied warranty of good workmanship, which is the reasonable expectation that a project will be constructed in a workmanlike manner, the foundation for construction defect claims.
The Interplay Between Warranty and Negligence Claims.
Construction defect claims sound in tort. Warranty claims sound in contract. The economic loss rule, an amorphous doctrine in Colorado, limits tort recoveries where knowledgeable parties have negotiated risk through contract terms. The Colorado Supreme Court adopted the economic loss rule in a construction case, Town of Alma v. AZCO Construction. In that case, the contractor agreed to provide a one year warranty. After the warranty expired, the contractor refused to perform repairs. The Town sued to recover the cost of the leaky pipeline. The court held that courts should not intervene when sophisticated parties allocated risk and dismissed the negligence claim.
This is a complicated, ever-evolving area of the law. An comprehensive article regarding the current status of the economic loss rule and the unanswered questions can be found here.