Liability for Defective Materials
This article was written by Brian Burke and was first publsihed in the NZ Build Magazine August 2015.
It is well known that construction contracts contain implied warranties that the builder will carry out building work in a good and workman like manner. It is less well known that construction contracts also include implied warranties that the builder will supply good and proper materials which are reasonably fit for the purpose for which they are required.
Building elements, which include building materials, must also satisfy the performance requirements of the Building Code. A minimum performance standard of 50 years is required if building elements provide structural support to the building, are difficult to access or replace, or a failure of any of those elements to comply with the Building Code would go undetected during normal use and maintenance. A minimum performance standard of 15 years is required if the building elements are moderately difficult to access or replace or a failure of those elements would go undetected during normal use but would be easily detected during normal maintenance.
Defects in building materials generally fall within the category of either patent defects, which can be easily seen, or latent defects which cannot be easily seen and may not become apparent for many years after the building work is completed. A builder will be in breach of a construction contract if the materials supplied are defective. This is so even though the builder may not be aware of the defect.
For construction contracts of the commercial nature implied warranties in relation to defects in building materials may be excluded by agreement however compliance with the Building Code cannot be excluded. For building work in relation to household units implied warranties that all materials will be reasonably fit for purpose and of good quality cannot be contracted out of.
Where a builder is not able to exclude liability for defects in building materials incorporated into building work, the builder will have to rely on its contract with the supplier of the building materials following any claim by an owner concerning defective building materials.
It is important that builders attempt to limit their liability, particularly for latent defects in commercial construction contracts, and ensure that contracts with their suppliers do not limit the liability of the supplier to a standard which is less than that of the builder.
It is also important that builders satisfy themselves as to the quality and performance of all materials which they use in their building work.