Legal Commentary: Implied Warranty on Owners Plans and Specifications
There are two types of warranties: express and implied.
Express warranties are those found in documents such as contracts, product warranties that come with the products, or may even be warranties made verbally by one of the parties to a contract or purchase.
Implied warranties are warranties created by the law, by legislation or by the courts. For example, Colorado appellate courts have established that homebuilders impliedly warrant that their houses be habitable. That means that they can be conveniently occupied for residential use.
In the construction industry, one of the most prominent implied warranties is that owners who provide plans and specifications to their contractors impliedly warrant the adequacy of their plans and specifications. That implied warranty had its beginning in the 1918 U.S. Supreme Court decision in Spearin v. U.S. and is therefore popularly now known as the Spearin Doctrine.
Under the Spearin Doctrine if the contractor completes the work in accordance with the owner’s plans and specifications but there is a deficiency or failure, the owner, not the contractor, is responsible. The architect or engineer involved may likely bear some or all of the responsibility as well.
What happens if owners breach their implied warranties? In most instances, their contractors would be entitled to additional compensation for extra work performed, delays experienced and any other additional expense or loss occasioned by the warranty breach.
The Colorado Court of Appeals has recognized the applicability of the Spearin Doctrine in Colorado with the observation that “ . . . the owner, not the contractor is responsible for the ‘consequences of defects in the plans and specifications.’”
Along the same line, case law from other jurisdictions indicates that owners are deemed by law to impliedly warrant that their plans and specifications are (1) accurate, and (2) suitable for their intended use. An owner breaches the first warranty when it turns out that the facts are different, and it breaches the second when the contractor is unable to achieve a satisfactory result within the participated contract time without extraordinary or unanticipated expense.
As in most construction disputes, the real question is whether the contractor met the requirements of the plans and specifications. If it did and something went wrong, the owner would and should be responsible for the consequences.
Albert B. Wolf is a principal in the Denver law firm of Wolf Slatkin & Madison P.C.