Builder Saved by Contract over Faulty Flue

In a recent case, a builder who included a contractual term which reduced his liability in tort (i.e. for a civil wrong) found this was sufficient to defeat a claim brought by a customer.

The builder had constructed a house which contained two gas fires. These were ventilated by flues, which the builder had also constructed. Fifteen years after the house was built, the owner had a gas safety test carried out and the flues failed. The owner therefore commissioned a survey, which found that the flues had not been constructed in accordance with the Building Regulations that were in force at the time.

The fault was discovered well after the builder’s guarantee of workmanship under the original contract to build the house had expired, so he did not owe the house owner a contractual duty to repair the flues. The owner therefore argued that the builder owed him a duty of care under the law of tort.

The builder contended that there was no duty of care which would give rise to a claim in tort. The house owner’s loss was economic and, as such, it was governed by the contract and the time limit for bringing a claim had expired.

The judge accepted that, in principle, builders can owe their clients a duty of care in tort as well as a contractual duty. In this case, however, the contract under which the property was built specifically excluded any defect outside the ten-year guarantee period. A claim that this clause itself was an unfair contract term and was therefore unenforceable under the Unfair Contract Terms Act 1977 (UCTA) was rejected as the UCTA specifically excludes contracts over land.

Contractors should be aware that they can have a duty of care in tort as well as under the contract. Liability in tort can extend well beyond the guarantee period under the contract. As this case demonstrates, care should be taken over the terms of the contract to ensure that liabilities under tort, as well as contract, are minimised.

For more advice please contact Bill Duncan