There is an implied term in an express contract between the builder-vendor and purchasers that a house to be constructed will be done in a skillful manner free from material defects.
Plaintiffs contracted the defendant for the construction of a new home. The contract, which had a standard merger clause, gave the plaintiffs an express warranty of one (1) year for the repair of any defects in the construction. Four years after the closing, plaintiffs noticed that their kitchen floor was uneven. After the defendants made several failed attempts to repair the floor, the plaintiffs hired a third party in order to assess the situation. It was found out that the house was built on wet soil. As such, the plaintffs sued the defendants for the recovery of the costs of repairs, alleging that the defendant knowingly constructed on poor soil, forcing the plaintiff to encumber numerous repairs. The trial court ruled in favor of the plaintiff on the basis of negligent construction and breach of implied warranty of workmanlike construction.
Are implied warranties of merchantability applicable to newly constructed homes?
The court affirmed the lower court's ruling for the plaintiffs. The "Housing Merchant" doctrine imposed a warranty that the house would have been made in a skillful manner that was free from material defects. The defendant's knowledge of the defect was not material, and the contract's standard merger clause was of no legal consequence because the defect was latent. The court held that the implication that defendant must construct a house free from material defects and in a skillful manner was consistent with the express terms of the contract and with the reasonable expectation of plaintiffs.