Dirty Deeds In Builders' Contracts

Let's talk about supplier warranty deeds.

If you're in the construction industry and you supply anything under a subcontract, you may have encountered this issue. It's becoming more common for lawyers and principals to require builders to have subcontractors get their suppliers to sign a supplier warranty deed. This deed is in favour of the principal and/or the builder, and it often goes beyond the normal warranty terms and conditions.

So why is this causing disputes? 

Well, suppliers may be reluctant to sign this deed, especially if it goes beyond their usual warranty terms. This can lead to a stalemate between the subbie, the supplier, and the builder, with the builder insisting that the subbie get the deed signed and the supplier refusing to do so. It can also result in full-blown disputes that cost a lot of money in legal fees and often leave no one satisfied.

The issue is further complicated by the fact that there can be a disconnect in expectations between the different levels of the contractual chain. For example, the principal may want the warranty to run from when the project is handed over, while the supplier may only honour the warranty if it's triggered within a reasonable amount of time after the goods were installed.

So, what can you do if you're a supplier and you're asked to sign a supplier warranty deed? First, it's important to check your contract and see if there's a warranty deed requirement. If there is, you should have a conversation with the builder before signing the contract. Let them know that your suppliers may not be willing to sign the deed and suggest alternative solutions.

It's also helpful if architects and specifiers can apply pressure to suppliers to sign the warranty deed directly with the principal before the product is even purchased. This can take the burden off the subcontractor and make things easier for everyone involved.

Ultimately, the key is communication and finding a solution that works for all parties involved. It's important to address this issue before it becomes a problem and leads to costly legal disputes. "The best time for you to encourage a supplier to sign a warranty deed with the principal is before you actually buy their product. Because by the time you buy their product, they don't really care about the after paperwork. They're just going to go, sorry to transact."

Supplier warranty deeds can be a source of frustration and disputes in the construction industry. It's important to check your contract, have open communication with the builder, and explore alternative solutions. By taking proactive steps to address this issue, you can avoid costly legal disputes and ensure that everyone involved is satisfied with the outcome.