Know Your Contract Terms

Posted: 11th February 2011

Gas ChimneyWhen the terms of a house building contract exclude a liability for losses which might be incurred by the client for defective works, the client has no redress under a general duty of care.
This was the decision of the Court of Appeal in a recent case concerning the construction of a property known as 12 Magnolia Rise, Prestbury. The property was constructed by P.E.Jones (Contractors) Ltd for its client a Mr James Robinson and subsequently sold to him after completion of the works.
During the construction of the property, Mr Robinson informed the contractors that he would like an additional gas fire flue built into a second room (the original contract included one gas fire flue). This was agreed under the contract and work progressed to completion in April 1992 when the work was completed and paid for.
It wasn’t until September 2004 that a British Gas service engineer discovered that the second gas flue was defective, resulting in both gas fires being disconnected for safety reasons. A subsequent surveyor’s report indicated that the flues had not been constructed in accordance with good building practice and within the Building Regulations in force at the time of construction. The required remedial work was estimated at a cost of around £35,000.
When attempts to resolve the owner’s claim for a refund of the cost of the remedial work failed, Mr Robinson issued a claim in the Manchester County Court. The claim was later transferred to the Technology and Construction Court where it was rejected on the grounds that the claim was out of time under the contract.
At appeal, it was argued that the trial judge was wrong in rejecting the claim and that the builder owed a duty of care to its client resulting in a liability for the economic loss suffered by the house owner. The appeal, along with the original claim, sought to rely on the Unfair Contract Terms Act. Although the build contract included terms excluding liability after a set period of time, it was argued that such terms could not exclude a general duty of care.
The Court of Appeal, however, upheld the trail judge’s ruling, dismissing the claim for damages against the builder.