• Statute – general consumer law such as the Consumer Guarantees Act 1993, or the United Kingdom equivalent (Consumer Rights Act 2015) give consumers specific rights if trade suppliers provide services which fail to meet statutory guarantees to remedy defects.
• Remedies against the builder or developer
o Chance for rectification – whether a consumer is obligated to give builders or developers a chance to mitigate loss and rectify any defective work will be weighed against the extent of defective work, fraudulent behaviour by the contractor, and issues of distrust following broken promises and failure to fulfil obligations under the construction contract.
o Specific performance – may be available against a builder or developer when an award of damages will be inadequate to remedy an unjustifiable breach of the construction contract.
Professor Britton suggests four drafting lessons for those entering construction contracts. His suggestions are particularly relevant to consumers in the United Kingdom, in ensuring protection mechanisms are incorporated prior to any defects becoming apparent, rather than relying on judicial remedies after defects have arisen:
1. ensure that the contract clearly identifies and defines the building quality obligations of the builder or developer, including compliance with any mandatory external standards;
2. clearly state what opportunity the builder or developer should be given to come back and rectify sub-standard work, the conditions of such work, and the owner’s alternate remedies if the builder or developer doesn’t comply;
3. include provision for assignment of obligations to future owners to claim against the original construction contract; and
4. do not agree to abandon any common law rights against the builder or developer by accepting consumer rights in place of common law rights under a third party warranty. However, realistically, even well-advised buyers may often find that a developer’s standard terms are not open to any meaningful negotiation. In such cases, the best alternative for consumers is to settle for the limited protection offered by a third party warranty backed by insurance.
Comment
The extent to which the terms of construction contracts are open for negotiation will depend entirely on the circumstances of the project and parties involved. Professor Britton’s paper highlights how fortunate we are in New Zealand to have considerable consumer protection statutes and provisions to protect consumer rights. The United Kingdom has a significant way to go to catch up with other jurisdictions in ensuring consumers are protected if and when construction defects arise.