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By J. Kent Holland, Jr., Esq.

Contractor installed pine wood decking renovating the front porch of a historical building. The project owner, who was also an architect, insisted on the use of pine despite the contractor’s “repeated recommendations to use a different material” such as vinyl flooring because pine was not a suitable choice for decking the northeast.   The owner’s insistence on pine constituted a design specification. The court concluded, “Although the contract did not expressly state whether the parties entered into a performance or design specification contract, it is abundantly clear that the parties were working pursuant to a design specification agreement.” Since a design specification contract requires a contractor to use the materials selected by the owner, the contractor does not bear any responsibility if the design proves to be inadequate to achieve the intended result. CGM Construction, Inc. v. Sydor, 144 A.D.3d 1434, 42 N.Y.S.3d 407 (2016). This decision applied the Spearin Doctrine.

In analyzing the facts of the case and the law that would be applied to those facts, the court stated:

“We thus turn to the question of whether plaintiff is liable to defendant for the alleged defects in its work. In contrast to a performance specification contract, which affords a contractor the freedom to choose the materials and methods employed to achieve a specified result, a design specification contract requires a contractor to use the materials, methods and design dictated by the owner, without bearing any “responsibility if the design proves inadequate to achieve the intended result [citations omitted].” In other words, when there is a design specification contract, a contractor follows the architectural plans and specifications provided by an owner, and the contractor will not be responsible for the consequences of defects in such plans and specifications or be prevented from recovering contractually-agreed upon payments for work completed in compliance with them [citations omitted].”

Whether a construction contract is one of performance or design specification turns on the language of the contract as a whole, with consideration given to factors such as “the nature and degree of the contractor’s involvement in the specification process, and the degree to which the contractor is allowed to exercise discretion in carrying out its performance” [citations omitted].”

The court found that the contractor’s work was completed according to the owner’s instructions and the owner was, therefore, responsible for any defects that resulted from his design and could not escape payment of the balance owed the contractor for the completed work.

Comment: Regardless of whether a contract would be deemed a performance or design specification contract, if the project owner insists on adherence to design details such as the choice of materials, the owner assumes the risk of that design or material failing to meet its performance needs. Design directives from the owner during contract performance are just as impactful as design or prescriptive specifications in the contract itself, when it comes to creating rights and obligations under the Spearin Doctrine.

 

About the author: Article written by J. Kent Holland, Jr., a construction lawyer located in Tysons Corner, Virginia, with a national practice (formerly with Wickwire Gavin, P.C. and now with Construction Risk Counsel, PLLC) representing design professionals, contractors and project owners.  He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects.  He is publisher of ConstructionRisk.com Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932.  This article is published in ConstructionRisk.com Report, Vol. 19, No. 6 (June 2017).

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