Monthly Archives: August 2014

THERE IS HOPE FOR CONTRACTORS YET! 96 Years of Protection in the Spearin Doctrine!

Texas courts generally apply the Spearin doctrine that the owner implicitly warrants to the contractor the sufficiency of the drawings and specifications. See Shintech Inc. v. Group Constructors, Inc., 688 S.W.2d 144, 151 (Tex. App.—Houston [14th Dist.] 1985, no writ); see generally United States v. Spearin, 248 U.S. 132, 39 S. Ct. 59, 63 L. Ed. 166 (1918).

What Happened?

A contractor agreed, for a lump sum, to build a dry-dock in a Navy Yard in accordance with plans and specifications prepared by the Government and which provided, incidentally, for reconstructing a sewer which intersected the site. See Spearin, 248 U.S. 132 at 133. The plans also prescribed the new location, dimensions, and materials. Id.  The contractor rebuilt the sewer to the correct specifications, and it was accepted by the Government. See Id.   However, due to a dam in a connecting sewer, within the Yard but beyond the limits of the operations, and also due to the general conditions of drainage, which were known to the Government but not to the contractor, back waters burst the new sewer, during heavy rain and high tide, and flooded the dry-dock excavation, causing damage and impeding the work. See Id.

The contractor, declined to proceed unless the Government paid or assumed the damage and made the sewer safe or assumed responsibility for future damage due to insufficient capacity, location and design. Id.  The Government annulled the contract. Id. The contractor brought a suit to recover the amount that he spent on the project and to recover damages for the contract’s annulment. Id.

The Law

The United States Supreme Court affirmed the lower court’s ruling for the contractor. See Id. at 132.  The Court stated that the drawings and specifications, prescribing the character, dimensions, and location of the sewer imported a warranty that if constructed in compliance with the drawings, the sewer would prove adequate. Id. at 133. The Court explained that the warranty was not overcome by general clauses requiring the contractor to examine the site, check-up the plans, and assume responsibility for the work until completion and acceptance. Id.

What It Means For You

According to this archaic case from 1918, there is an implied warranty that if a contractor constructs a project to the specifications of the owner, the completed project will prove to be adequate. If this is not the case, the contractor may quit the job and recover costs. Of course, nearly 100 years later, a standard AIA contract has all but completely negated this doctrine with various clauses. However, it is good to know that some measure of protection is afforded to contractors through decades of precedent.

Nothing here is intended to be legal advice nor should it be construed as such. If you have questions or would like to discuss an issue with your company, please call 832-930-0529 or visit http://www.kestephenslaw.com.

IMPLIED WARRANTIES: ALMOST EVERYTHING YOU SHOULD KNOW ABOUT THEM!

The builder-vendor of a house impliedly warrants that the house was constructed in a good and workmanlike manner and is suitable for human habitation Humber v. Morton, 426 S.W.2d 554, 555 (Tex. 1968); Codner v. Arellano, 40 S.W.3d 666, 672 (Tex. App.—Austin 2001, no pet.) (implied warranty to perform services to repair or modify existing property in good and workman-like manner may also arise under common law if mandated by public policy). The warranty of habitability requires that a house be safe, sanitary, and otherwise fit for humans to inhabit. The warranty of good and workmanlike construction requires that the construction be done in a manner in which an ordinarily prudent person engaged in similar work would have performed under similar circumstances. The idea of a reasonable standard of skill and diligence is implicit in the good and workmanlike standard. See Miller v. Spencer, 732 S.W.2d 758, 760 (Tex. App.—Dallas 1987, no writ) (warranties described, but not applied)]. The implied warranties of good and workmanlike construction and habitability may not be waived or disclaimed Melody Home Mfg. Co. v. Barnes, 741 S.W.2d 349, 355 (Tex. 1987)(emphasis added).

Generally, the concept of good workmanship, as used in a construction contract, has a relative meaning, depending on the context in which it is used. Chappell Hill Bank v. Lane Bank Equip., 38 S.W.3d 237, 243 (Tex. App.—Texarkana 2001, pet. Denied). When the contract requires the work to be completed to the owner’s satisfaction, courts will generally apply an objective test to determine whether the party required to be satisfied acted in good faith Chappell Hill Bank 38 S.W.3d at 243.

These implied warranties are automatically assigned to a subsequent purchaser of the house Gupta v. Ritter Homes, Inc., 646 S.W.2d 168, 169 (Tex. 1983) (purchaser of used house has cause of action under Deceptive Trade Practices Act to recover damages for latent defects not discoverable by purchaser’s reasonably prudent inspection at time of sale)]. This is true even if the builder of the home was the first occupant March v. Thiery, 729 S.W.2d 889, 892 (Tex. App.—Corpus Christi 1987, no writ).

The implied warranty of good workmanship extends to partially completed houses, as long as it is clear what portion of the house has been fully constructed by the builder. This is because a builder/vendor who constructs a building for residential purposes impliedly warrants that whatever construction he or she has done has been done in a good and workmanlike manner. March v. Thiery, 729 S.W.2d 889, 893 (Tex. App.—Corpus Christi 1987, no writ) (rejecting builder’s contention that because house was only 25 percent completed, every phase of construction must be considered to be only 25 percent completed).

There is no implied warranty of good and workmanlike service or implied warranty of habitability from a subcontractor or materials supplier with whom the property owner had no direct contractual relationship. Pugh v. General Terrazzo Supplies, Inc., 243 S.W.3d 84, 89–90 (Tex. App.—Houston [1st Dist.] 2007, pet. filed). The owner’s remedy is against the general contractor. Pugh v. General Terrazzo Supplies, Inc., 243 S.W.3d 84, 90 (Tex. App.—Houston [1st Dist.] 2007, pet. filed).

In the absence of a provision in the contract to the contrary, the builder also implicitly covenants that the construction will comply with all relevant municipal and county codes applicable to the intended use of the property. Tips v. Hartland Developers, Inc., 961 S.W.2d 618, 621–623 (Tex. App.—San Antonio 1998, no pet.) (recognizing rule, but holding that parties agreed to address compliance with fire codes in later change orders due to uncertainty of use and possible destruction of surrounding buildings).

Texas courts generally apply the Spearin doctrine that the owner implicitly warrants to the contractor the sufficiency of the drawings and specifications. Shintech Inc. v. Group Constructors, Inc., 688 S.W.2d 144, 151 (Tex. App.—Houston [14th Dist.] 1985, no writ); see generally United States v. Spearin, 248 U.S. 132, 39 S. Ct. 59, 63 L. Ed. 166 (1918)].

It is also important to note that the implied warranty of merchantability does not apply to the construction and sale of a house. Haney v. Purcell Co., Inc., 796 S.W.2d 782, 786 (Tex. App.—Houston [1st Dist.] 1990, den.).

Should you have any questions regarding your next construction project or any construction dispute, please feel free to reach out to me at 832-930-0529 or info@kestephenslaw.com.

None of the information given here is intended to be legal advice and it should not be construed as such. Special Thanks to Mathew Bender and Company for the thorough information.