Week 7 - Warranties-1.pdf - American Bar Association Forum...

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American Bar Association Forum on Construction Law But Is She Really, Truly Dead? Warranties, Guarantees, Decennial Liability and Statutes of Limitation/Repose David L. Fine Mirik O’Connell Worcester, MA Ryan Manies Polsinelli Kansas City, MO Lauren P. McLaughlin BrigliaMcLaughlin, PLLC Vienna, Virginia Presented at the 2018 Midwinter Program January 17-19, 2018 Sanibel Harbour Marriott Resort & Spa, Fort Myers FL ©2018 American Bar Association
I. Express Warranties An express warranty is “an assurance by one party to a contract of the existence of a fact upon which the other party may rely.” 1 As stated in the Uniform Commercial Code (UCC), “the whole purpose of the law of warranty is to determine what it is that the seller has in essence agreed to sell.” 2 In order to recover for breach of an express warranty, a plaintiff must prove: (1) an express affirmation of fact or promise by the seller relating to the goods; (2) that such affirmation of fact or promise became a part of the basis of the bargain; (3) that the plaintiff relied upon said affirmation of fact or promise; (4) that the goods failed to comply with the affirmation of fact or promise; (5) that the plaintiff was injured by such failure of the product to comply with the express warranty; and (6) that such failure was the proximate cause of the plaintiff's injury. 3 Express warranties can be created orally or in writing. When analyzing a warranty issue, it must be determined whether the transaction relates to the sale of goods or, rather, the rendering of services. If the transaction is for the sale of goods, then the UCC will apply. Of course, in the context of construction, the rendering of services and the sale of goods is often conflated. In that case, most courts follow the “predominant factor test” set forth in Article 2 of the UCC. Under the predominant factor test, the Court looks at whether the predominant factor, thrust, and purpose of the contract, reasonably stated, is the rendition of a service, with goods only incidentally involved, or is a transaction of sale, with labor incidentally involved. 4 If the later, the UCC will apply to the entire transaction. 5 A. Form Contracts Every industry standard form construction contract and subcontract includes an express warranty. Under the new AIA Document A401-2017 Standard Form of Agreement Between Contractor and Subcontractor, Section 4.6.1, the subcontractor warrants to the owner, architect, and contractor that materials and equipment furnished under the Subcontract will be of good
quality and new, that the work will conform to the requirements of the subcontract documents, and will be free from defects. Similar warranty obligations are found under ConsensusDocs 450 Standard Agreement Between Design-Builder and Subcontractor and DBIA 560 Standard Form of Agreement Between Design-Builder and Design- Build Subcontractor. The subcontractor’s warranty obligations are not limited, however, to the terms as stated within the standardized (and

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