Many times, contractors are sued for both breach of contract and breach of warranty, and then again for breach of express and implied warranties, leaving the contractor hopelessly confused.  If the warranties are contained in the contract, why isn’t breach of warranty redundant with breach of contract?  And, how is the contract subject to express and implied warranties?

Fundamentally, what are warranties?  They are representations made by one party upon which another party may rely.  Warranties can be express or implied or created by statute. In this discussion, we will focus on express and implied warranties.

Texas law treats warranties as independent, subsidiary promises to a contract, meaning that breaching a warranty gives rise to a claim for breach of warranty separate and distinct from a claim for breach of contract.  Knowing the warranties that attach to a typical construction contract gives you the power to shift risk during the contracting stage and manage risk during the construction phase.

1.     Express Warranties

An express warranty is one written into the contract for construction.  Most construction contracts typically contain a number of warranties in which the contractor warrants its work. A common express warranty is that the contractor will perform the work in a “good and workmanlike manner” and “free of defects”.

Express warranties may also be limited.  Some express warranties only last one year from the date of substantial completion.  Others cover different building systems for different lengths of time.  Some highly negotiated warranty provisions allow the contractor to charge a fee for performing the repairs.  The scope and limitations of express warranties are best  and most cost-effectively addressed during the contract negotiation phase.

2.    Implied Warranties

There is often more than meets the eye when it comes to construction agreements. While express warranties are directly written into a contract, implied warranties on the other hand imported by courts into the contract.  They are not created by the parties’ negotiation of construction contracts.

Some, but not all, of implied warranties may be disclaimed. One example of a common implied warranty is the implied warranty of good and workmanlike performance of services. This implied warranty, however, may be superseded by the contract between the parties if the language in the contract sufficiently describes the manner, performance, or quality of services. For instance, of the contract specifies certain performance criteria for HVAC systems, it may be sufficient to supersede the implied warranty of good and workmanlike construction.

Most construction contracts contain express warranties or are subject to implied ones.  The specific warranty language in your contract is particularly important as it will affect your long-term risk and exposure to potential litigation. Consulting with legal counsel when drafting and negotiating the language in contractual warranties is crucial. Our attorneys in our Dallas and Austin offices are available to answer any questions you may have.

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