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Legal - Design defects threaten Texas contractors

image Shelly Masters, Principal Cokinos | Young Austin, TX

SAN ANTONIO - Many Texas contractors wrongly assume they have no responsibility for errors or omissions in plans and specifications. To the contrary, Texas courts have held contractors – not owners – bear the risk and liability of deficient plans when the contract is silent on the issue.

 

 

 

    Unlike most states, Texas contractors remain largely unprotected for the errors and omissions of architects. Texas courts have refused to follow what is known nationwide as the “Spearin Doctrine” – a federal court ruling that an owner of a construction project has an implied duty to provide the contractor with accurate plans and specifications.  If a contractor builds according to the owner’s plans and specifications, the contractor will not be responsible for the consequences of any defects in those documents.  Thus, the contractor is relieved of liability to the owner if its work is defective due to following the design documents provided by the owner.

    Instead, Texas follows the holding by the Texas Supreme Court in the Lonergan case wherein the court stated:

    There is no more reason why the [owner] should be held responsible for the alleged defects in the specifications that it did not discover for want of skill and knowledge of the business of an architect, than there is for holding [the contractor] to be bound by their acceptance of the defective plans which they understood as well as the [owner] did, and in all probability much better. The fact that [the contractor] contracted to construct the building according to the specifications furnished implied that they understood the plans. ... If there be any obligation resting upon the [owner], as guarantor of the sufficiency of the specifications, it must be found expressed in the language of the contract, or there must be found in that contract such language as would justify the court in concluding that the parties intended that the [owner] should guarantee the sufficiency of the specifications to [the contractor].

    Because Texas law does not follow the Spearin doctrine, contractors must bear the risk of design deficiencies in the absence of contract provisions otherwise allocating this risk.  Further, contractors have no direct claim for negligence against architects for damages incurred as a result of design errors or omissions.  

    As a result, a contractor’s primary tool for limiting risk and liability is by agreement.  Contractors must carefully review and revise construction contract language to reduce or eliminate such risk.  Texas courts have upheld such contract provisions.

    Avoid entering into contracts with language meant to shift the risk of loss from design errors or omissions onto the contractor through the use of specific disclaimers making the contractor the guarantor of the adequacy of the plans and specifications. Limitations should also be placed on language requiring the contractor to thoroughly inspect the site and design documents and otherwise assume responsibility for any errors therein.  Beware – the more specific and detailed the clause, the more likely it will be enforced. 

    Contractors should aggressively negotiate very specific provisions negating liability for design errors based on the scope of work of the project. For example, contractors have successfully shifted the risk back to the owner with contract language expressly stating that the contractor shall be entitled to rely on the accuracy of information furnished by the owner; the contractor shall not be liable to the owner or architect for damage resulting from errors or omissions in the contract documents; and, the contractor’s review of plans and specifications are made in the contractor’s capacity as a contractor and not as a licensed design professional. 
 
    Shelly Masters is a Principal in the Austin office of Cokinos | Young, a firm specializing in the representation of those in the construction industry for almost 30 years.  She represents clients in the areas of construction, labor and employment, commercial, and products liability law.  Her firm also has offices in Dallas, Houston and San Antonio.  She can be reached by e-mail at smasters@cokinoslaw.com or by phone at (512) 615-1139.


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