Who Pays for Mistakes

You’ve been here before. Every contractor has.

Something doesn’t pass inspection. It’s clearly wrong. Work has to be torn out and re-done. The question is, “Who pays?” Was it the fault of the prime? Or the sub? Or the architect or engineer?

The Easy Case

If the approved plans and specs are clear and work wasn’t done as prescribed, it’s the contractor’s mistake. No question. Case closed.

But what if the plans and specs aren’t clear? Or are clearly in conflict? For example, suppose the plans show studs 16” o.c. and the specs call out 24” o.c. A mistake like that drops us into what lawyers call precedence of the documents. Some construction contracts go on and on about which prevails if there’s a conflict between plans, specs, industry standards, etc. Logic dictates that precedence favor what was truly intended, assuming anyone actually considered the issue. For example, handwritten notes and change orders should get precedence over either plans or specs.

What if the plans and specs are mute on some point? That’s a tougher case. Is it the designer’s fault? True, architects and engineers have been found liable for simple omissions. But don’t expect either to cover the cost of ambiguity in the plans. The cost of fixing what’s broken usually falls on contractors and subs. It’s a risk inherent in the construction process.

Obviously, there’s a good way to stay out of trouble. If the plans and specs aren’t clear, if you aren’t sure what the code requires, if something doesn’t seem right, start asking questions. Don’t assume. Don’t let anyone pick up tools while there’s doubt about the finished product.

Courts usually put it this way: A contractor has an implied duty to give notice when something either isn’t clear or seems defective. A leading case on this is Rubin v. Coles, decided in New York in 1931. The addition to a brick building in Flatbush was subsiding. The building department cited the owner. Eventually the contractor was called to account. His defense was perfect. The foundation complied exactly with the plans. According to Judge Geismar, that wasn’t enough. Most of Flatbush is built on filled soil. The contractor, not the designer, is the man on the spot, put there to use his training and experience to either correct plans or at least give warning of the defect.

It has been repeatedly held that, even though he be bound to follow fixed plans and specifications, the contractor owes the duty to examine such plans and judge of their sufficiency; that he is bound to discover defects that are reasonably discoverable or patent; and where he knows or had reason to believe that the plans are defective, and follows them without pointing out such defects to the owner or architect, he is not entitled to recover if the building proves insufficient because of such defects.

Now the Hard Part

Notice the words, “that he is bound to discover defects that are reasonably discoverable or patent.” In Rubin v. Coles, the plans were silent on depth of the foundation. “It was, therefore, the duty of the contractors to construct it upon solid ground so as to produce a level structure, even though it might have been necessary to make greater excavation or more substantial fill."

Decide for yourself. Is that a reasonable standard? Should contractors make design decisions when something seems out of place? I’m not convinced. Fortunately, there’s an easy way to put risk of design flaws back where it belongs, on the owner or design professional. Write two points into your contracts: The contractor has no obligation to either (1) detect design errors or (2) amend dimensions and descriptions in the plans.

Construction Contract Writer makes it easy to draft agreements like that. Mistakes don’t have to add to your cost. The trial version is free.