This was an appeal from a decision of judge Coulson. The Judge held that Decoma UK Ltd could claim damages, subject to a cap, but could not claim under the contract.

Decoma was an operator of paint-spraying facilities and Haden Drysys International Ltd specialised in the design and construction of processed plants. The parties entered into a bespoke turnkey waterborne paint line agreement: Decoma as employer/owner and Haden as contractor.

Haden were obliged under the contract to carry out, design, construct and complete the work in a good and workmanlike manner in sufficient conformance with equipment performance specifications. Decoma alleged that Haden failed properly to complete work. Despite this, they took over and used the facility.

1 Did the warranties under the contract relate only to the period after final acceptance?

2 Did the breach of warranty provision in the contract give rise to a claim for damages rather than to an entitlement to payment under the contract?

Reference

The warranties did not only take effect after final acceptance and the judge was wrong to hold that the warranties gave rise to a claim for damages rather than to an entitlement to payment under the contract. The warranties were contemplated under the contract to apply prior to final acceptance date certification.

The main provision in the contract enabled the owner to recover and obliged the contractor to pay the amount that the clause stipulated in the provided circumstances. This was a claim for a contractual payment under the contract, not a claim for damages for breach of it, and therefore the contractual provisions had to be met before Decoma's claim can be made.

The plain meaning of the warranty in the contract was that the contractor was liable to pay the demonstrable direct costs, charges and expenses if the owner chooses to correct or cause to be corrected the contractor's default under the contract. That obligation to pay occurs upon receipt of the invoices from the owner rather than a claim for an invoice for future unascertained costs. Decoma could, therefore, only make a claim under the contract if it had carried out remedial works.

*Full case details
Decoma UK Ltd (Formerly Conix UK Ltd) v Haden Drysys International Ltd, Court of Appeal, LJ May, LJ Jonathon Parker, Sir Peter Gibson [2006] EWHC Civ 723

Contact Fenwick Elliott on 020 7421 1986 or NGould@fenwickelliott.co.uk

Postscript

A number of warranties are generally given in a construction contract, including the warranty to carry out the works in a good and workmanlike manner. If it is not expressly included in a contract, the term that the contractor will carry out the works in a good and workmanlike manner will generally be implied into the contract. In the provision in this contract, the warranty to carry out the works in a good and workmanlike manner was an ongoing obligation during the course of the contract works.