Contractors may be surprised to learn that they do not have the right to return to remedy a defect unless a contract exists between the contractor and the employer which expressly confers the right.
A properly drawn up building contract should contain a defects liability provision which specifies a period during which the contractor is obliged to return to site and remedy any defects that may emerge after practical completion. A typical defects liability period is normally between 6 to 12 months. This affords the contractor a right to receive notice of defects in the stipulated period and to have the opportunity of correcting them at his own expense.
Without an express right to return, the contractor does not have the right to return to the site to rectify defects and the employer is entitled to engage the services of a third party to rectify any defects that emerge after practical completion. However, it is worth noting that an employer who engages a third party to remedy any defects may be criticised for acting unreasonably and failing to mitigate his loss. This is because under common law the employer has a general duty to mitigate its losses before making a claim against the contractor by taking reasonable steps to avoid or reduce them. Therefore, where an employer fails to allow a contractor to return and remedy a defect, any subsequent claim by the employer against the contractor may be limited to amount that it would have cost the contractor to remedy the defect; the costs often being significantly less than that of bringing in new contractors to do so.
The relevant test is whether the employer has failed to act reasonably by refusing the contractor the right to return and remedy the defect. If the contractor's original work was of a low standard then the employer can argue that it was reasonable to refuse to let the same contractor return to the site.
The position is different where a defect arises and the employer notifies the contractor but contractor fails to rectify it. In this situation the employer may recover the costs of engaging a third party to rectify the defect.
If you have any queries on this article or would like advice on your company’s contractual documentation please contact us.
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