Warranties and Limiting the Remedy to an Opportunity to Repair

A contractor may attempt to limit the warranty that will be given to an owner. The decision of the Alabama Supreme Court in Turner v. Westhampton Court, LLC, 903 So. 2d 82 (Ala. 2004) is instructive in explaining Alabama construction law on this issue. That case involved a homeowners claim involving synthetic stucco. The court found court considered and enforced a one year homeowners warranty and limited terms of the homeowners warranty claims to problems that were discovered in the first year. That is the court found that a contractor could limit the written one-year warranty it gave to purchasers by requiring purchasers to give written notice of any latent defect within the warranty period. Also, the court found as matter of first impression, purchasers effectively disclaimed implied warranty of habitability. It should be noted that Turner discusses Alabama construction law related to the disclaimer of warranties and this is not necessarily binding on other jurisdictions.

A contractor also may try to limit an owner’s remedy to having the contractor repair whatever damage may exist. In such a case, the remedy set forth in the contract is the only one available to the owner. Courts addressing Alabama construction law in this area have recognized that “[c]ontracting parties may, and often do, limit by agreement the non breaching party’s remedies in the event of breach.” McDonald v. Schwartz, 706 So. 2d 1230, 1232 (Ala. Civ. App. 1997) (involving a suit over faulty construction of a residence); see also, Ala. Code § 7 2 719(a) (allowing for parties to limit remedies “to repair and replacement of nonconforming goods or parts”). That is, “[w]here the parties have set out in a written contract the warranties agreed upon and have provided a remedy in case of a breach of warranty, the remedy thus provided is exclusive.” McDonald, 706 So.2d at 1232; Morgan Building and Spas. Inc. v. Gillett, No. 2980788, 2000 WL 264247, *24 (Ala.Civ.App., Mar 10, 2000); see generally Mann v. Bank of Tallassee, 694 So.2d 1375, 1380 (Ala. Civ. App. 1996) (the party seeking recovery under an agreement must first show their own performance).

In McDonald, cited above, the court addressed the argument of a contractor that (1) the owner’s claim should be limited to requiring the contractor to make repairs and (2) that the owner could not sue for money damages for the contractor’s breach. The court found that since the contractor did “not modify or limit the homeowners’ remedies in the event of a breach” then “the homeowners were entitled to treat the contractor’s admittedly defective workmanship as a breach of contract and to resort to the usual remedies for breach.” Id. at 1232. Therefore, in the absence of a limiting provision, the courts will not limit an owner’s remedy.

Footnotes:
1 Alabama Code section 7-1-719(a) has been deemed as instructive in residential construction cases when considering limiting remedies to repairs. McDonald v. Schwartz, 706 So.2d 1230, 1232 (Ala. Civ. App. 1997).