Out-Law / Your Daily Need-To-Know

Out-Law Guide 10 min. read

Defective work in construction projects

Defective work is a major cause of disputes and litigation. An understanding of the law in relation to defects is therefore of relevance to those involved in construction projects.

In construction and engineering projects the nature and type of defects can vary dramatically, as can the point at which they become apparent. At one end of the scale, minor ‘snagging’ items can easily be corrected prior to a building being handed over, whereas at the other extreme, significant defects may occur long after the works have been completed and can necessitate extensive remedial works.

What is a defect?

A reasonable definition of a defect is a fault; an aspect of the work, materials or design which is in some respect not in accordance with the requirements of the contract – or which renders the works as a whole unfit for their reasonably intended purpose.

Where the contractor is aware of the purpose of the works it is to construct, the completed works – and any design element for which the contractor is responsible – should be reasonably fit for that intended purpose. That implied term can be changed in the contract terms agreed by the parties, but otherwise it will apply to a typical building or engineering contract – and can determine the question of whether a defect is present. There are important considerations to apply where matters of design arise as set out in our guide to design responsibility.

Contracts sometimes also specifically define what is meant by a “defect” – although such definitions often add little to what a court would consider a defect to be. For example, under NEC contracts, a defect is defined as part of the works not in accordance with the works information/scope, or part of the works designed by the contractor which is not in accordance with the law or the accepted design.

What standard of workmanship must be achieved?

Whether a defect is present will be determined with reference to a number of factors, including benchmark standards on workmanship. In this regard, the focus is on the skill, or lack of skill, applied by a contractor carrying out a given task or work activity.

Most contracts expressly state the standard of workmanship expected. For example, JCT contracts provide that the contractor shall carry out and complete the works in a proper and workmanlike manner, as well as in compliance with the contract documents and various statutory requirements.

In England and Wales, if there is no express obligation, the contractor is under an obligation at common law to carry out its work in a good and workmanlike manner. Whether the workmanship in question has reached that standard will be a question of fact, and often expert evidence is required as to what the contractor should have done to achieve the standard – and whether it did so.

What about materials?

As is the case with workmanship, contracts often set out express requirements and stipulations for material types and quality, which can be very sophisticated in larger projects. Absent such provisions, there is a statutory obligation that goods and materials will be of satisfactory quality – found in the 1979 Sale of Goods Act and the 1982 Supply of Goods and Services Act.

“Satisfactory quality” is a term that is further defined in the legislation. But, in brief, the quality of goods is judged on various criteria, including their state and condition – as well as their fitness for purpose; appearance and finish; freedom from minor defects; safety; and durability.

What about defective design?

Conventionally, if drawings, specifications, and other scope documents are supplied to a contractor, it will not normally have to do more than carry out the work according to the relevant details in a workmanlike manner, using suitable materials. An employer will have no remedy if any defects in the works are due solely to exact compliance with that design, with the exception of cases of obvious prospective unsuitability, where there is a duty on the contractor to warn the employer or designer.

If it is for the contractor to design work or select materials for the work, and if there are no express terms to a different effect, there will also be an implied term that the design will be suitable, or fit, for its intended purpose – an obligation to ensure the design achieves a particular result or outcome. Very often, though, that obligation will be changed through negotiation to one of exercising reasonable skill and care – which is the default obligation for design professionals. But if that is not the case, the default obligation on the contractor will be one of fitness for purpose.

In the 2017 MT Højgaard case regarding rules on contractor’s liability for design, the UK Supreme Court held that it was possible for a contract not only to require that a specific standard was complied with, but also that the work would have to achieve a particular outcome or state of affairs. The obligation in question in that case was a service life of 20 years – something that the contractor had not achieved, even though it had complied with prescribed technical standards.

Even when a contractor is working to the design of another, and when it has no design responsibility in a strict contractual sense, it will still make choices and decisions as to how the project should be built. For example, the choice between a flat roof and a pitched roof for a building will be a matter of design, but the choice between using a screw or a nail when building a given part of the roof may well be a matter of workmanship – and therefore the responsibility of the contractor. If it turns out that the use of, say, screws rather than nails was the wrong choice, because it weakened the structural strength of that part of the roof, that is not a design defect, but rather one of workmanship.

Patent and latent defects

Many disputes concerning defects turn on whether a defect was patent or latent at a given point in time – the distinction is often important in determining liability for defects and in the context of settlement agreements.

A patent defect is one that is detectable by reasonable inspection. Patent defects are plain to see – or at least that is the theory.

The courts have generally held that a patent defect must be capable of being observed, but it does not actually need to have been seen. So, in other words, it would be possible to have an inspection of works and for a patent defect simply to be missed – the mere fact of an inspection having taken place does not remove the possibility of patent defects.

By contrast, a latent defect is one which, by definition, is not visible in the works and may not become apparent for many years.

As with the question of what amounts to a patent defect, the principle of a “latent defect” raises questions over the extent to which a defect must be concealed before it is regarded as latent. A latent defect has been described as a "concealed flaw" that would not be discovered during the kind of inspection reasonably to be expected for the work in question. Disputes will turn on the facts and consideration of whether the particular defects could have been discovered or not.

Completion and defects

Where the work has reached the stage of practical completion or is near completion, this will bring a focus on defects, as not uncommonly the question will be whether the defects are of such a nature and extent to prevent completion being certified. That in turn leads to the question whether the contract defines the state and stage the works must have reached to allow completion to be certified. For more information please see our guide to practical completion.

Returning to site after completion to remedy defects

At common law there is no right for contractors to return to a site to remedy defects after practical completion of works – although such a right might be specifically conferred upon the contractor by the terms of the contract. The contract defects liability provisions might do this.            

If the contractor is asked to remedy defects and fails to do so then, unless the contract says otherwise, an employer would ordinarily be entitled to employ others to rectify defects. If an employer proceeds this way, and that was unreasonable in the circumstances of the case, then the employer may be prevented from recovering more from the original contractor than it would have cost that contractor to undertake the necessary work, had it been allowed to do so.

Whether such a course of action was unreasonable, or whether there was good reason for the employer to proceed in that way, will depend on the facts. Courts are generally sympathetic to parties forced into remedial steps as a result of others’ failings.

Defect liability provisions

Many standard form contracts expressly cater for the contractor to return to site to remedy defects – in what are commonly referred to as defects liability provisions.

The JCT standard form refers to a “rectification period”, commencing on completion and lasting for a long as the parties agree, often 12 months – although in some case there may be different periods for different types of defect, or different sections of the work. 

JCT contracts provide for notice of defects arising during the rectification period to be given to the contractor during that period. The contractor must then make good such notified defects within a reasonable time of notification. However, the contractor can also be instructed not to carry out such works, if the employer consents – and if that happens an appropriate deduction can be made from the contract sum instead in relation to the relevant defect.  

If a defect becomes apparent after the rectification period it can still be notified, and the contractor can still be asked to return to correct it – but there is an express mechanism and regulation for defects notified before the end of the rectification period. A certificate of making good should be issued when, in the architect or contract administrator’s opinion, the notified defects have been corrected.

Under NEC contracts, the defects arrangements are different, though not radically so. The designated supervisor can notify the contractor of a defect when it is found, up until the defects date. The defects date is based on a period to be agreed by the parties. As with JCT, the contractor must thereafter rectify the notified defect before the end of the defect correction period.

Usefully, NEC contracts also allow for agreement on a change to the works information/scope so that a defect does not need to be corrected – this in effect amounts to an agreed relaxation of the works information/scope, with a related reduction in prices.

In terms of certificates, the supervisor should issue a defects certificate at the later of the defects period and the end of the last defect correction period. This certificate will either record the notified defects which have not been corrected, or that all the notified defects have been corrected.

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