5.5 Assurance of Project Performance

• Library: Virginia Construction Law Deskbook (Virginia CLE) (2019 Ed.)

5.5 ASSURANCE OF PROJECT PERFORMANCE

5.501 Warranty Considerations.

A. In General. Breach of warranty is a common theory of recovery against a contractor and is often included in addition to breach of contract and other causes of action. It is important to understand the terms of the warranty because they can dramatically alter the parties' rights and remedies under a construction contract. A warranty may sharply limit a contractor's liability to certain exclusive remedies or may impose much broader obligations than would otherwise be recognized for a common law breach of contract claim. Frequently, a standard warranty will require that the contractor return to the project after substantial completion to correct problems that have occurred during the warranty period defined by the contract documents.

Contract or express warranties are those that are included in the construction contract. In addition, statutory warranties or warranties implied by law can impart liability.

B. Implied and Statutory Warranties. Inherent in every commercial construction contract is an implied warranty that the contract will be performed in a good and workmanlike manner and that the project will be reasonably fit for the purpose for which it is intended. ¹⁷⁵

The Virginia Code provides for an implied warranty for the sale of new homes. ¹⁷⁶ These warranties are made by the vendor of the home and extend for one year from the sale of the new home. ¹⁷⁷ The vendor must warrant that the home is free from structural defects, constructed in a

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workmanlike manner, and fit for habitation. ¹⁷⁸ Any action for breach of warranty under this section must be brought within two years. ¹⁷⁹

The implied warranties under section 55.1-357 are in addition to other express or implied warranties that may exist and may be waived by contract if certain conditions are met. ¹⁸⁰

Previously, the Virginia Condominium Act provided for a warranty against structural defects on the common elements and units by the condominium declarant for two years. Section 55.1-1955 provides a period for breach of warranty claims of within five years after the date that the warranty period began or within one year after a warranty review committee is formed pursuant to section 55.1-1943(B), whichever occurs later. ¹⁸¹ The declarant must warrant that the units are fit for habitation and are constructed in a workmanlike manner. ¹⁸²

C. Contract Warranties. A construction contract will often contain one or more express warranties made by the contractor. An express warranty is a promise by the contractor relating to the work done under the contract. Generally, a warranty by a contractor serves as a promise that, should certain defects or problems arise, the contractor will repair or take care of the problems at no charge to the owner. Such warranties allocate the risk of defects or failure in the construction between the parties to the contract. Examples of common express warranties are:

• A warranty that the work will be performed in a good and workmanlike manner;

• A warranty that design, engineering, other professional services, and construction services will be performed in accordance with agreed upon standards set forth in the construction contract;

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• A warranty that the work will conform to the requirements of the contract documents; and

• A warranty against defects due to faulty materials or workmanship.

Warranties are often limited in time, with a one-year warranty being common. In addition to typical one-year warranties covering all project components, specialty warranties are often prescribed in the project specifications for specialty items such as roof membranes, mechanical equipment, and other manufactured items.

D. Warranty Remedies. The owner of a project may bring a breach of warranty claim against the contractor for alleged defects that are covered...