An overview of warranty claims in North Carolina construction law

Everyone knows intuitively what a warranty is. When a consumer good breaks easily or does not do what it is supposed to, we often ask whether there is a warranty we can rely on to have the item replaced or repaired. A warranty is a representation by the manufacturer or seller that the particular item is of good quality and can do what it is sold to do.

The warranty in the construction industry

Warranties are also a big part of construction law. Intrinsically, the concept of a warranty often has to do with ensuring the quality of a good or service. It follows that in construction, warranties deal largely with whether the materials used in a project are of good quality and whether the construction methods and practices followed were sound and created a reasonably safe, acceptable building.

North Carolina law applicable to a construction warranty

In North Carolina construction law, a warranty pertaining to the goods and materials purchased for use in a construction project is governed by state statute, specifically the Uniform Commercial Code or UCC. But a warranty that applies to the quality of construction services and workmanship is controlled by the common law, that which is established by courts through their written decisions.

When a construction contract mixes both construction services and the purchase of goods, North Carolina courts look at the "predominant factor test" to decide whether the agreement has more factors related to services or more related to the sale of goods. The answer to this question determines whether the court will apply common law or the UCC to the warranty analysis.

Express and implied warranties

In North Carolina law, two main types of warranties arise in construction projects: express and implied. An express warranty is one laid out specifically in writing in the construction contract or sometimes given orally. For example, a contractor may promise in a contract to provide services according to certain accepted practices in the industry or to fix problems related to workmanship and defects for one year from completion.

North Carolina courts recognize three main implied warranties in construction relating to the quality of services provided:

  • The implied warranty of workmanship or workmanlike construction
  • The implied warranty of habitability
  • The implied warranty of suitability of plans and specifications

For goods and materials purchased for use in construction when the UCC applies, other implied warranties exist like the implied warranty of merchantability that warrants the goods are of a quality that they can be used for their intended purpose and the implied warranty of fitness for a particular purpose.

Breach of warranty

When a warranty is breached in a construction project, it can be complicated to determine a fair resolution of the matter and what damages would be appropriate under the particular circumstances. It is a good idea for any property owner asserting a breach of warranty claim to consult with an experienced construction law attorney for information about legal rights and remedies.

Likewise, a contractor, subcontractor, architect, engineer or supplier faced with a customer asserting a breach of contract should have knowledgeable legal counsel on board to advise on the best response, negotiate on his or her behalf, and defend against a lawsuit, if necessary.

Often breach of warranty claims in construction can be resolved through negotiation, mediation or arbitration, rather than progressing all the way to litigation. Retaining skilled legal counsel to advocate through the process can be crucial.