You may be familiar with the implied warranty of constructability. Under this legal doctrine, if you comply with the owner-supplied plans and specifications on a public project, you have an argument that you are not responsible for any loss or damage due to defective or insufficient plans. However, there is also limited support for what is known as the implied warranty of availability.
COVID-19 has caused a variety of material shortages and price increases affecting lumber, steel and shingles. Recently, FRSA affiliate, RCASF issued a notice that foam used for tile installation was in short supply, delaying projects. As a result of these material shortages, contractors have had to adjust to delays and determine how to keep the customer happy despite the inability to obtain key materials needed for construction.
In most cases, preferred materials are readily available for construction projects. However, there could be a project where an owner requires the use of a construction material that is difficult to locate or is available only from a single supplier. In this case, it could be reasonable to conclude that the owner implicitly warrants the specified material’s availability.
Under the implied warranty of availability, if an owner specifies a material available only from one supplier or requests one supplier for a specialty or brand name material and that supplier cannot or will not provide the required material, then the owner’s specifications are defective. In this instance, it follows that the owner has broken the implied warranty of constructability and is therefore liable for any damages or expenses that the contractor encounters.
Although the implied warranty of constructability and the implied warranty of availability are connected, there is a difference. The constructability warranty focuses on the accuracy of the plans and specifications, while the availability warranty concerns the commercial availability of specified materials. Per the implied warranty of availability, the owner warrants that the selected supplier can provide a specified construction material.
The issue is further complicated by timeframe and price. Case law has narrowed the parameters of the implied warranty of
availability in this way: although the owner warrants commercial availability, the owner does not warrant that the supplier can
provide the material for a specific price or in a timely fashion.
In addition, this implied warranty pertains only to owner-selected suppliers or construction materials, not to materials or supplier
selections that the contractor makes. If a contractor recommends using a specialty or brand-name material from a single supplier, the contractor is solely and entirely responsible for securing the material. Therefore, the contractor is liable for damages if the
material is unavailable for the construction project.
The implied warranty of constructability was up for debate in two notable cases: US v. Spearin, 248 US 132 (1918) and Phillips Jordan v. State of Florida Department of Transportation, 602 So.2d 1310 (Fla. 1st DCA 1992).
In the first case, a utility contractor named Spearin was under contract with the United States to build a dry dock for the Brooklyn Navy Yard and relocate a six-foot storm sewer at the site. The US government provided the plans and specifications, including the
materials, dimensions and new location for the sewer. When the sewer later failed, it was discovered that the city plans were inaccurate, but the government claimed that Spearin was at fault and therefore responsible for repairing the sewer. Spearin stated that the government should change the sewer design and make the repairs or pay him to fix it. The government refused those terms, terminated the contract, revised the sewer design and hired another contractor to complete the job.
Spearin then sued the US government, claiming wrongful termination and seeking money owed for the work he had performed, along with profits for the unperformed work. The Court of Claims ruled in Spearin’s favor. The case was appealed and then heard by the US Supreme Court, which upheld the decision and created the Spearin Doctrine. The Supreme Court stated that a contractor is obligated to complete a project according to the specifications that the owner provides and is not liable for problems resulting from inaccurate plans.
In contrast, in the second case, Phillips and Jordan were hired by the Florida Department of Transportation (DOT) to build a fence along I-75 In Brevard County. After the project was completed, Phillips and Jordan requested additional payment since they had to clear and grub more land than specified in the contract. The DOT refused and Phillips and Jordan filed suit.
The court ruled for the DOT, stating that the implied warranty of construction did not apply in this case, as Phillips and Jordan inspected the land in question before bidding on the project and should have been aware of the area and equipment requirements.
As for the implied warranty of availability, the seminal case is Aerodex, Inc. v. United States, 189 Ct. Cl. 344, 417, F.2d 1361 (1969). In that case, Aerodex won a bid to provide missile systems for the government. Per the bid proposal and contract documents, the contractor was required to obtain a brand-name version of a missile system component from a specific supplier. However, the component supplier refused to sell the part to the contractor. The court ruled in favor of Aerodex, stating that the government was responsible for assuring that the component was available or allowing the bidders to make a component duplication. The government breached the implied warranty of availability, so it was liable for the contractor’s damages.
It is worth noting that the implied warranties identified herein are primarily used on public projects as evidenced by the cases above. However, it may be possible to make similar arguments using different theories on private projects.
Before you bid on any construction project, make sure that you carefully read the material specifications and understand your related responsibility. If you have questions about a preferred brand or supplier, raise those issues before accepting a contract.
We anticipate that price increases and material shortages will continue throughout 2021. Accounting for those issues contractually as well as maintaining an open line of communication with your suppliers is essential to avoid unnecessary delays or unexpected
material price inflation.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.
Trent Cotney is Board Certified in Construction Law by the Florida Bar, an advocate for the roofing industry and General Counsel of FRSA. For more information, contact the author at 866-303-5868 or go to www.cotneycl.com.
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