Blog

When is a guarantee not a guarantee?

Posted by: admin    Tags:      Posted date:  December 14, 2011

No comment

When you buy a new house normally the house will be covered by the National House Builders Contract (NHBC), giving extensive protection against defects for two years and against major damage for the following eight years (all other liabilities are excluded). The contract must be fair and reasonable, but no judge is going to say that the long-established, well understood NHBC is not fair and reasonable – although experience has shown that it is not a complete panacea.

Suppose that a major defect in construction is discovered after the expiry of the NHBC and the limitation period. Has the owner a remedy? In a recent case the owner discovered serious defects in the two flues, which necessitated the closure of the gas to two gas fires, and required expensive remedial work.

So far as the economic loss goes, there is no liability for a breach of contract as such. The builder would only be liable for personal injury – for example, an explosion – for failing to take reasonable care for the safety of the inhabitants.

The normal relationship between builder and owner does not give rise to any special assumption of responsibility by the builder. However a liability may arise if there is a special relationship between the builder and the owner of the house. Such a relationship usually arises where the client particularly relies upon the proffessional skill of the other party, such as an architect or surveyor, and that other party knows that the client will rely upon that professional skill and therefore may suffer economic loss as a consequence of ngligence on the part of the professional.

There may be a n indirect remedy for the owner of the house in public law, for example, where the building or developer obtained the planning permission and in the event departed from it and also was in breach of the building regulations, thereby leading to problems . Action by the local authority, in its discretion, might lead to some rectification but would be unlikely to yield adequate compensation for the owner.