Construction Defect Defenses: Loss Mitigation, Economic Waste, Right to Repair, Betterment Doctrine

Description

Construction contractors and subcontractors are subject to complaints about the quality of their work. Project managers and construction executives should be aware of the defenses that may be available if a customer complains that work is defective.

Every party aggrieved by a construction defect owes a duty to mitigate damages. If an owner does not seek bids, the contractor may have a defense based on the owner's failure to mitigate damages.

Typically, if there is no express provision in the contract, then contractors do not have an automatic right to return to remedy defects, and the owner can employ anyone to complete remedial work. If there is an express right to repair provision, such as a defects liability period giving the contractor a period, such as 12 months, during which the contractor must return and remedy defects, it could be in both parties' interests for the contractor to return.

Many complaints about construction work are attributable to poor design. In general, contractors and subcontractors who build following the design furnished by the owner are not liable for the results, a concept known as the Spearin doctrine. Project managers and superintendents should review the progress and updated plans and schedules to verify that work is proceeding per the owner-furnished design.

Sometimes the repairs specified by owners include elements not called for in the original design. These additional elements would have cost the owner more money up front if the owner had included them in the original design documents. The "betterment" doctrine recognizes that it is unfair for an owner to get additional elements as part of a damage claim when the owner would have had to pay upfront for the omitted elements.

Listen as our expert panel discusses common construction defect defenses. The panel will address how contractors and subcontractors can reduce their exposure through sound management practices and careful contracting practices.