REALWorld Law


Obligatory requirements

Are any terms and conditions imposed or implied by law or mandatory in contracts for the design or carrying out of building works?

United States

United States

Yes, numerous provisions are or can be implied in design and construction contracts by either case law or statute. These provisions vary from state to state; however, a few examples of implied obligations include:

Standard of care

While the owner, designer, and contractor are free to agree contractually on the standard of care by which the work will be performed, in most cases a standard of care will be provided by statute or common law if the construction contract is silent. While most implied standards will differ in some respects from state to state, the standards are reasonably similar and in some manner require proper workmanship or skill ordinarily used by members of the profession.

Setting forth the standard of care in the contract could be of benefit to either the owner or the design professional or contractor, depending on the standard of care agreed to and other circumstances. On the one hand, an owner may be able to negotiate a higher standard of care than common law or statute would provide. On the other hand, once agreed to by contract, the design professional or contractor may be able to avoid implied warranties that could heighten a standard of care or even punitive damages that could be awarded were the contract silent.

Duty to comply with building codes

A design professional generally has a duty to design the project in accordance with applicable building codes.

Implied covenant of good faith and fair dealing

Most US states (but not all) obligate the parties to a contract to act in good faith. The obligation of good faith also has been incorporated into the Uniform Commercial Code. Simply put, the covenant of good faith requires that people deal fairly with another.

Even in states where good faith is not universally implied in commercial contracts, a state may require good faith in specific instances. For example, a contractor may be obligated to comply with building codes, even though such compliance is not an express obligation in the contract.

Differing site conditions

Common law may, in some jurisdictions, allow a contractor additional compensation and/or time when encountering hidden, unexpected conditions on a construction site that a contractor should not have been able to discover during its examination of the site. The contractor may be entitled to additional compensation and/or time under certain circumstances even if the contractor agreed to perform the work for a lump sum, guaranteed a not-to-exceed price, or guaranteed a completion date the contractor cannot meet because of the differing site conditions.

Lien rights

Lien rights are provided by statute in all states; however, provisions and requirements vary. Stated broadly, a person who contracts to improve real property may have a legal right to encumber the property for the amount owed.

Applicable law

Some states require that the law of that state is applicable to any contract for construction in that state, despite the parties’ agreement otherwise.

Statute of limitations

See Limitation period.

Other provisions

Other provisions that may or may not be implied in a contract, depending on the jurisdiction in the United States, include copyright protection, impartiality of an architect, cardinal change, implied authority for a change order, implied contractual indemnity coverage, common law one-year corrective remedy, implied warranties of design and design adequacy, duty of cooperation, duty of disclosure, site investigation duty, duties regarding the handling and disposal of hazardous materials, implied inspection authority, doctrine of impracticability, anti-indemnity statutes, implied contractual indemnity, merchantability, strict compliance doctrine, implied warranty of habitability and consumer protection statutes.