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Volume 5 - Number 18 | April 30, 2007
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EDITOR'S NOTES
In 1918, the United States Supreme Court first recognized that a contractor is not responsible for the consequences of defective design documents furnished by the project owner. Under this so-called “Spearin doctrine,” an owner extends an implied warranty that its plans and specifications are complete, accurate and buildable. But the Ohio Supreme Court, in a very restrictive interpretation of the Spearin doctrine, just ruled that a change order clause provided a contractor with a complete remedy for defective design documents, effectively superseding the implied warranty. A dissenting opinion said the design was so bad that the owner might as well have given the contractor “some sketches on the backs of a few cocktail napkins.”
In another case, a contractor argued that an owner’s contribution to late completion of the project should preclude the owner from assessing any liquidated damages against the contractor. A federal appeals court ruled, however, that responsibility for late completion could be apportioned between the project owner and the contractor.
Contract documents sometimes contain internal inconsistencies. A New York court had to address a set of standard specifications which called for a one-year warranty period and a special provision of the contract which stipulated a two-year period. It’s an old adage of contract interpretation that the specific governs the general.
This week's Tips and Techniques features part 1 of a 2-part article on Standard of Care by Advisor editorial board member Dr. Malcolm Lewis. Dr. Lewis looks at how new technologies and environmental issues affect professional standards of care in the design and construction industry.
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OWNER’S IMPLIED WARRANTY OF DESIGN OVERRIDDEN BY CHANGE ORDER CLAUSE
The Ohio Supreme Court has ruled that a project owner’s implied warranty of the drawings and specifications was overridden by the Change Order clause of the contract. The owner could correct a flawed design through the change order process without incurring additional liability. A dissenting opinion said the owner might as well have given the contractor “some sketches on the backs of a few cocktail napkins.”
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