Warranties are a tricky element of the construction industry, which any trade professional can attest to. From inconsistent rules across all fifty states to intricate nuances that can stab you in the back if you are not careful, they are a challenge to navigate in many cases. Despite their reputation for mystery and danger, however, warranties can be whittled down to a few essential points, and those two points are necessary knowledge for any construction professional. Today, we will dive into the most essential, need-to-know information about the basic function of warranties across the country, starting with a definition.
What is a Construction Warranty?
A warranty is a legal obligation to repair or replace defective work/materials for a specific time after completing the project. The rules on construction warranties are state-specific and it is crucial you understand what type of warranty you need to provide. When it comes to consumer products or residential work, the federal government sets the minimum standard, which you can find more information on in our upcoming residential warranties blog. However, a few general rules apply across the board, and it is essential to understand them when dealing with warranties.
Construction Warranties: Rule Number 1
If you promised it during the sale, you are on the hook to make sure what you supply or comply with that promise.
This is referred to as an “express warranty” because it is based on a direct action you take. You promised, so it is enforceable. Here is an example: If you tell your potential client that you will waterproof their basement and there will be no leaks when you are done, you must honor that promise. If you finish the project and there is a leak in the basement ten days later, you need to fix it. Your promise is legally binding, especially if it is a written commitment. We understand that things said in a sales call can be misinterpreted and/or remembered incorrectly, so how can you protect your company against warranty claims for promises you did not make?
The answer is simple. In your contract or your terms or conditions that the customer signs before you begin the work, include this statement:
“The only commitments that contractor has made regarding the work to be performed are in this written contract. There have been no verbal promises outside of this contract. The only warranties offered are the ones specifically mentioned in this contract.”
This statement will limit your liability for warranty claims to only what is expressly written in your contract.
Prevent a Lawsuit
The Cromeens Law Firm is here to protect you and your business. Our hope is that you never get stuck in a legal battle because you were not adequately informed or prepared. Work with us to equip yourself with the knowledge you need to protect your business and your hard-earned money.
Construction Warranties: Rule Number 2
Most states also have what is referred to as “implied warranties.” These are not created by your express actions such as saying or doing something but are implied by the situation. In Texas, there is an implied warranty of merchantability. This means that if you are a business that sells something for a specified purpose, it must be functional for that purpose. For example, if you own a roofing supply business, the products you sell need to meet the roofing industry standards. It is implied that the products you sell will be up to code because you are committed to providing materials for a specific kind of project.
There is also an implied warranty of fitness for a particular purpose in Texas. This means that if you are selling something to someone and you know what it will be used for, it must be able to accomplish that job properly. If you sell shingles at your roofing supply store and you know that your customers are buying your shingles to protect their roofs, the shingles must perform that function.
It is important to note that these warranties implied by law can be disclaimed. This disclaimer of warranties can be put in your contract, invoice, and/or your terms and conditions. Whether you decide to disclaim them, you must be aware of these warranties. You can prevent your company from having to honor implied warranty claims by having something in writing letting your customer know that you do not honor these types of warranty claims.
The “As Is” Conundrum
Now you know what construction warranties are and how they function, but what about the nitty-gritty? A question we often run into regarding implied warranties is, “can you sell your work or product without a warranty?” And the short answer is, sometimes. Let us explain.
Selling a product or your work without a warranty is referred to as selling something “as is.” This means you are selling the work or the product in its current condition, with no warranty or guarantee. So, yes, you can sell things “as is” as long as you are not in one of the following states: Connecticut, Kansas, Main, Maryland, Massachusetts, Minnesota, Mississippi, New Hampshire, Vermont, Washington, West Virginia, and The District of Columbia. In these states, it is against the law to sell things “as is.”
The rules surrounding warranties vary from state to state, but there are a few unifying facts about them across the board. Do your part to understand what is true in every state and what is only true in your state. Connect with a construction attorney who understands how warranties function in the state you work in and get informed about your rights and ensure you have your contracts reliably reviewed and negotiated to protect you from the potential negative fallout warranties can bring about.
To get more information on warranties and how they work, join us in this month’s webinar covering Warranties in Construction Contracts on June 23 at 12 pm CST. Support your success and take advantage of some free education. There is a lot you can do to stay out of the courtroom; be proactive and get started today.
This article is intended as a general educational overview of the subject matter and is not intended to be a comprehensive survey of recent jurisprudence, nor a substitute for legal advice for a specific legal matter. If you have a legal issue, please consult an attorney.