- Posted by John P. Ahlers
- On January 29, 2015
A basic principle of construction law is that one who furnishes plans and specifications for a project impliedly warrants that the plans and specifications are workable and sufficient.[i] A long line of Washington cases has recognized this rule.[ii]
- 1. United States v. Spearin
The origin of the implied warranty of design adequacy was the landmark case of United States v. Spearin, which virtually every American jurisdiction now follows. In Spearin, a contractor agreed to construct a dry dock at the Brooklyn Navy Yard under a contract with the United States. The government’s detailed plans and specifications required the contractor to excavate the site and then relocate and reconstruct a six-foot brick sewer line that intersected the site. After the sewer was relocated and reconstructed, heavy rains caused it to back up which, in turn, created internal water pressures that broke the line in several places and flooded the dry dock excavation. Based upon a contract clause that made the contractor responsible for the work until the completion and final acceptance, the government insisted that the contractor clean up the site and reconstruct the damaged line at its own expense. The government nevertheless redesigned the line to reinforce it against future ruptures under heavy rain conditions. The Unites States Supreme Court ruled that the government was liable for breach of its implied warranty of the adequacy of the plans and specifications, and affirmed an award to the contractor of its contract costs and profits notwithstanding the government’s lack of negligence, lack of knowledge or special expertise, and the use of general “boilerplate” disclaimer clauses in the contract.
- 2. Spearin Doctrine Used as a “Sword”
The owner’s implied warranty may be used by the contractor as a “sword” to recover compensation for extra work where other express contract routes (such as a differing site conditions clause) are unavailable. For example, in Fairbanks North Star Borough v. Kandik Inc. & Assocs., the plans and specifications provided to the contractor by the government understated the amount of material that needed to be excavated.[iii] The government, however, had deleted the differing site conditions clause from the contract. The Supreme Court of Alaska, however, allowed the contractor to recover extra costs incurred by performing pursuant to defective specifications.
- 3. Disclaiming the Implied Warranty of Adequate Design
There is some confusion as to whether an owner’s implied warranty of adequate design can be disclaimed. There are two separate questions: (1) whether the implied warranty can be legally disclaimed; and (2) if so, what specific language is sufficient to disclaim the warranty? In Spearin, the United States Supreme Court suggested that a general non-specific disclaimer would be ineffective to disclaim the implied warranty of adequate design. There is a significant body of law in both federal and state courts rejecting attempts by owners to disclaim this implied warranty with general disclaimers. Generally, owners have more success disclaiming the implied warranty through the use of various specific disclaimers.
A Washington case takes this issue one step further finding that a contractor can affirmatively warrant the adequacy of the owner’s design. In Shopping Mgmt. Co. v. Rupp, the owner of the shopping center brought suit against the contractor and its surety when two automatic submersible sewage pumps called for in the owner’s specifications malfunctioned, disrupting the disposal of effluent from the septic tank to the drain field.[iv] The contract between the owner and the contractor contained the following warranty/guaranty:
The contractor shall guaranty the satisfactory operation of all materials and equipment installed under this contract, and shall repair or replace to the satisfaction of the owner or architect any defective material, equipment or workmanship which may show itself within one (1) year after the date of final acceptance.
In holding the contractor responsible for the pump failures, the Washington Supreme Court relied upon that contract language, which had construed to be a “guaranty” that the work constructed pursuant to the owner’s design would “operate satisfactorily:”
We think the guaranty clause of the contract involved in this case … broad … in that [the contractor] thereby undertook to do more than merely repair or replace any defective material, equipment, or workmanship which might appear within one (1) year after the date of final acceptance. The express wording of the guaranteed provision is that the contractor shall guaranty the satisfactory operation of all materials and equipment installed under this contract. The contract includes the plans and specifications. Therefore, [the contractor] must be deemed to have guaranteed the material and equipment installed by him would operate satisfactorily under the plans and specifications of the owner. Thus it is immaterial in this case whether the pumps failed to operate satisfactorily because of the plans and specifications or because of the defective materials, equipment or workmanship. In either event, [the contractor] must be held, under the language of his guaranty, to have assumed the risks of the events which subsequently transpired, as described in the trial court or rescission in its findings of fact.
This holding is by no means universally adopted. For example, in Corporation of Presiding Bishop of Church of Jesus Christ of Latter-Day Saints v. Cavanaugh, a scope of work clause required the contractor to provide a “complete and satisfactory system,” but the California Court of Appeals did not construe that provision as a warranty, rather the Court found that the provision simply stated the scope of the specified undertaking.[v]
[i] United States v. Spearin, 248 U.S. 132, 169, 39 S. Ct. 59, 63 L. Ed. 166 (1918); see also, Bruner and O’Connor on Construction Law, § 9:78 et seq.
[ii] Ericksen v. Edmonds School District No. 15, Snohomish County, 13 Wn.2d 398, 408, 125 P.2d 275 (1942); Weston v. New Bethel Baptist Church, 23 Wn. App. 747, 753, 598 P.2d 411 (1978).
[iii] 795 P.2d 793 (Alaska 1990), opinion vacated in part and rehearing on other grounds, 823 P.2d 832 (Alaska 1991).
[iv] 54 Wn.2d 624, 343 P.2d 877 (1959).
[v] 217 Cal. App. 2d 492, 32 Cal. Rptr. 144 (1963).