Defects after practical completion
Defects after practical completion
109 The contractor has re-laid a defective
floor at the end of the rectification period.
Can the cost of re-laying the carpet be
deducted from the final account?
Under SBC clause 2.38 and similar clauses under other JCT contracts, the contractor is entitled to return to site to make good those defects notified to it in the schedule of defects delivered by the architect at the end of the rectification period. The defects in question are defects, shrinkages and other faults that are due to materials or workmanship not being in accordance with the contract or to a failure by the contractor to carry out its obligations under the contractor’s designed portion. An appropriate deduction is to be made from the contract sum in respect of those defects which the architect, with the employer’s consent, has instructed the contractor not to make good.
It is assumed that the carpet, to which the question refers, was purchased and laid by the employer after practical completion of the Works. The defects are breaches of contract on the part of the contractor. The question is whether the contractor is liable for the cost of having the carpet professionally re-laid after the remedial work. The answer to the question depends on the principle of foreseeability. In other words, was it obvious to the contractor at the time the contract was executed that a defect in the flooring which would have to be put right by the contractor completely re-laying the floor would also require the re-laying of carpet, installed by the employer after practical completion, of the same type and quality as was in fact the case? If the answer to that question is ‘Yes’, the contractor is liable for the cost of re-laying the carpet.1 However, that cost cannot be deducted from the final account by the architect in the final certificate, because the carpet is not part of the Works. The employer has the choice either of taking action against the contractor for the cost, or – the simpler method – of deducting the cost from the amount due in the final certificate after having served the appropriate pay less notices under clauses 4.13 and 4.15.4.
If it was foreseeable that the employer would lay a carpet, but not of such quality or requiring such care in laying, the contractor would be liable only for the kind of costs that would be reasonably foreseeable.2
110 The contractor says that it has no liability
under IC for defects appearing after the end
of the rectification period. Is that correct?
The rectification period in all standard building contracts, despite its name, does not signify the maximum period during which the contractor is liable for rectifying defects. It is there for the contractor’s benefit. The rectification period in IC is an example. Under the terms of the contract, the contractor’s obligation is to construct the building in accordance with the contract documents (clause 2.1), which probably consist of drawings and a specification. If the contractor does not comply with the contract documents, amended if appropriate by architect’s instructions, it is in breach of contract.
When the contractor offers the building to the architect as having reached practical completion and the architect has issued a certificate to that effect, the building should have no visible defects and there should be very little work left to complete.3 The contractor’s licence to occupy the site expires at practical completion and it must leave. If anything is found at this point to be not in accordance with the contract documents and architect’s instructions, the contractor is in breach of contract.
If there was no rectification period, the employer would have the right to notify the contractor of the defects, seek competitive quotations from other contractors for making good, have the defects corrected by the lowest tenderer, and recover from the original contractor as damages the total cost of such making good, including professional fees. The employer would have the option to request the contractor to make good the defects at its own cost, but in the absence of a rectification period, the employer would not be bound to do so and the contractor would not be bound to make good, although it would be liable for the breaches of contract. The contractor’s liability would extend for six years from practical completion (twelve years if the contract was executed as a deed) in accordance with the Limitation Act 1980.
The rectification period (formerly the ‘defects liability period’ under previous JCT forms of contract) was introduced to give the contractor the right to return to site and make good any defects notified at the end of the period. It is obviously less costly to the contractor to make good its own defects than to pay for other contractors to do the work. If the employer does not want the contractor to make good such defects, the architect may issue instructions to that effect to the contractor, and an ‘appropriate deduction’ is to be made from the contract sum (clause 2.30). Unless the reason for the instructions concerns some serious fault on the part of the contractor, such as failure to act despite several reminders, the deduction from the contract sum can be only what it would have cost the contractor to make good.4
It is clear from the contract that the contractor’s right to return to site extends only to those defects that appear during the rectification period. Any defects that appear afterwards are still breaches of contract, and the contractor is of course still liable for them to the end of the limitation period. The employer is entitled to deal with them as though there was no rectification period, as noted above.5
111 Are latent defects all the defects
discovered during the rectification period?
No, quite the reverse. Defects can be placed into two categories:
• patent defects, and