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Chapter 16
Chapter 16 is devoted to litigation, with focus on owner–contractor disputes.
The chapter introduces the basic theories of liability and defenses to claims. It
uses the terminology learned in chapters 3, 4 and 5 in the context of actual
disputes between specific parties.
Section 16.2 introduces two basic principles: responsibility follows control
(unless the risk has been shifted), supplemented by the implied covenant of good
faith and fair dealing. How much of construction law can be explained with just
those two principles?
The Spearin decision in Section 16.3B is a landmark case, one cited very
frequently in court decisions. We reproduce it because frequently it is cited for
The commentary section immediately following the Spearin case focuses on
the misrepresentation component of the Spearin doctrine. Since
misrepresentation includes the element of reliance, there is also discussion of
whether an owner may disclaim the implied warranty. As so many contractor
claims are based on the Spearin doctrine some have referred to the doctrine as a
“lawyers relief” act. It merits careful treatment.
• breach of contract
• tort (usually negligence)
• breach of an express warranty
• violation of the implied warranty of workmanship
• statutory violations (especially for homeowners)
Subrogation itself is not so important to the construction litigation; however,
contractual waiver of subrogation — a strategy adopted by both the AIA and the
EJCDC — most certainly is. The thrust of the waiver is that accidental damage to
the project during the construction process is resolved by property insurance, so
that the parties are not bogged down in litigation. For this reason, subrogation is
placed in the section on contractor defenses to owner claims.
Answers to Chapter Questions
1.) What is the difference between an express warranty and an implied warranty?
2.) What is the Spearin doctrine and how could a contractor use this as a “shield” or a
“sword?”
3.) How are the majority of claims decided when defects can be traced to both the
owner and the contractor?
4.) What is design delegation and what is an example of how it functions?
5.) According to the American Institute of Architects A201–2007 Document, what are
the three warranties as to the quality of the contractor’s work?
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work conforms to the requirements of the contract documents, and (3) the
work will be free from defects.
6.) What is the Magnuson–Moss Warranty Act?
7.) What must a contractor show in order to invoke the defense of commercial
impracticability?
8.) What are the two components of an unconscionability defense?
9.) Many courts have held that the contractor who follows the design is not responsible
for a defect unless which things occur?
10.) What are the similarities and differences between a statute of limitations
and a statute of repose?
