Warranties are assurances provided by a seller or manufacturer regarding the quality and condition of a product or service. They outline the responsibilities and remedies if the product fails to meet specified standards, including options for repair, replacement, or refund in case of defects or non-performance.
Implied warranties are legal assurances that guarantee residential building work will meet certain quality standards, even if not explicitly mentioned in a contract. In New Zealand, these are provided under the Building Act 2004 and the Consumer Guarantees Act 2003, protecting consumers and ensuring the work is fit for its intended purpose. If a breach occurs and cannot be remedied through negotiation, the affected party may seek damages if the value of the work is significantly diminished or, in serious cases, cancel the contract.
The implied warranties are set out in s 362I of the Building Act. They require that:
The above warranties apply for 10 years regardless of the form of the contract. In addition to the above warranties, s 362Q provides a 12-month defect repair period in that if any defects are identified within 12 months from the completion date, the contractor has an obligation to fix them. We recommend keeping copies of your contract and all other building documentation for your own reference and for future purchasers of the property. Also, all copies of all correspondence with the contractors involved in construction.
Where there is a breach of an implied warranty and if the breach can be remedied:
In most cases, a breach can be resolved through negotiation. However, if the breach cannot be remedied, the party may obtain from the contractor damages in compensation for any reduction in value of the product of the building work below the price paid or is payable by the client for that work, or cancel the contract.
These warranties extend to subcontractors. This means that communication is key. Contractors should make all subcontractors aware of the required standards, especially in relation to any amendments or variations so that they may then be communicated back to the principal.
The guarantees provided under the Consumer Guarantees Act are set out in ss 28 to 30. Where building services are supplied to a consumer, they are guaranteed such that:
Where services fail to comply with guarantees, and the failure can be remedied, the consumer may:
It is important that contractors and consumers alike are aware of the implied warranties provided by the legislation on top of the warranties explicitly provided in construction contracts.
Contact us if you are concerned about the implied warranties identified in this article following or during your construction project. Our lawyers at Norling Law can review your circumstances and discuss strategies on how to progress your project as part of our no obligation legal consultation.
To book a free 30-minute consultation, please click this link https://norlinglaw.co.nz/consultation-brent/
Brent is the Director of Norling Law. He has a wealth of experience in the District Court, High Court, Court of Appeal and Supreme Court. Brent is passionate about negotiating favourable outcomes for his clients and able to implement this in his daily negotiations.
Book a free consultation to get clarity on your options and next steps
We’ve been guiding people through times of uncertainty since 2015. Talk to us for free to see what we can do for you.
