Whose Design is it Anyway? Examining a Contractor’s liability for design issues

More than just builders… sometimes

Although many contractors believe they are only the builders on a project, contractors may also be part designer. When a contractor is provided with the owner’s design, they have obligations to ensure that the owner’s design meets the standard stated in the contract. In some contracts, these standards might be very high and may even guarantee the performance of the design. Other contracts may not expressly specify a standard. For these contracts, contractors will be required to carry out the work in a good and workmanlike manner and may have the obligation to warn the owner of potential design issues.

Most contracts contain specifications that set out (usually in detail) the precise nature of the work to be performed. Although these specifications are provided by the owner, the owner does not guarantee that the work can be carried out based on the specifications.

So, what happens when the contractor properly and without defect constructs the project in accordance with the specifications but there is a design defect? The answer depends on the terms of the contract between the parties.

What does the contract say?

Some contracts require the contractor to expressly guarantee the work. These guarantees can take the form of a specific outcome (i.e. the roof will not leak for 5 years) or a warranty (i.e. fitness for purpose). In these cases, there may be a conflict between the owner’s specifications and the contractor’s promises under the contract.

Courts have determined that the promises in the contract will be read with (or in addition to) the specifications, which means that using the specified material or following the specifications does not relieve the contractor of design liability.

For example, the Supreme Court of Canada held a contractor to the five-year guarantee that the roof would remain weather tight despite the owner’s defective specifications.¹ In this case, although the contractor used the required adhesive and conformed to all of the owner’s specifications, the Court concluded the contractor assumed the risk of roof failure through its guarantee. The contractor was found liable for the leaking roof even though its work and materials conformed to the owner’s specifications.

In another example, the British Columbia Court of Appeal found the contractor responsible for defective pipes (which the owner had specified) because the contractor had expressly warranted that the pipe would “be fit for the purpose for which they are to be used” and “free from all defects arising at any time from faulty design.²

However, not all contracts will not contain express performance obligations or warranties. In these circumstances, the court will imply a warranty to perform the work in a good and workmanlike manner but will not place the design responsibility on the contractor.³

Although the contractor may have no design responsibilities in these circumstances, a contractor may have a duty to warn the owner if the contractor knows (or should know) that the owner’s design is unsuitable.⁴ This duty to warn may increase if the contractor suggests alternatives to the owner’s design.

Takeaways

In conclusion, a contractor’s liability for the owner’s design will depend on the agreement between the parties. Contractors should carefully consider the risks contained in their contracts and whether the contract can even be performed as specified.

If parties intend for the owner’s selection of material or provision of specifications to relieve the contractor from any liability with the materials or design, it will be important to explicitly have those terms in the contract. Contractors may also want to consider including a provision excluding all design warranties, express or implied, and a provision that removes their duty to warn of design issues.

¹ Steel Company of Canada v Willand Management, [1966] SCR 746, http://canlii.ca/t/1tvt9.
² Greater Vancouver Water District v North American Pipe & Steel, 2012 BCCA 337, http://canlii.ca/t/fsb9n.
³ Double Dutch Construction Inc v Colwell, 2012 NBQB 317, http://canlii.ca/t/fszwg.
⁴ Brunswick Construction Ltée v Nowlan, [1975] 2 SCR 523, http://canlii.ca/t/1z1gc.