Defects liability period DLP

The defects liability period (now called the 'rectification period' in Joint Contracts Tribunal (JCT) contracts) begins upon certification of practical completion and typically lasts six to twelve months.

During this period, the client reports any defects that arise to the contract administrator who decides whether they are defects (i.e. works that are not in accordance with the contract), or whether they are in fact maintenance issues. If the contract administrator considers they are defects, then they may issue instructions to the contractor to make them good within a reasonable time.

NB: It is actually the contractor's responsibility to identify and rectify defects, not the client's, so if the client does bring defects to the contractor's notice, they should make clear that this is not a comprehensive list of all defects

At the end of the defects liability period, the contract administrator prepares a schedule of defects, listing those defects that have not yet been rectified, and agrees with the contractor the date by which they will be rectified. The contractor must in any event rectify them within a reasonable time.

When the contract administrator considers all the items on the schedule of defects have been rectified, they issue a certificate of making good defects. This has the effect of releasing the remainder of any retention and results in the final certificate being issued.

It is important to note that the defects liability period is not a chance to correct problems apparent at practical completion, it is a period during which the contractor may be recalled to rectify defects which appear. If there are defects apparent before practical completion, then these should be rectified before a certificate of practical completion is issued.

This can, however, put the contract administrator in a difficult position, as both the contractor and the client may be keen to issue the certificate (so that the building can be handed over) and yet defects (more than a de minimis) are apparent in the works. Issuing the certificate could render the contract administrator liable for problems that this causes for example in the calculation of liquidated damages.

In practice, it is not unusual, particularly if it is in the client’s interests, for a certificate of practical completion to be issued with an attached list of minor omissions and defects to be rectified in the defects period. An example of this would be if the certificate of practical completion might trigger tenants fit out and subsequent payment of rent, when it is in nobody’s interest to delay the programme just for delivery of a piece of door furniture or a replacement light fitting.

If the contract administrator is pressured to certify practical completion even though the works are not complete, they might consider informing the client in writing of the potential problems of doing so, obtaining written consent from the client to certify practical completion and obtaining agreement from the contractor that they will complete the works and rectify any defects. If the contract administrator is not confident about the potential problems this may cause, they may advise the client to seek legal advice.

Notes:

Some forms of contract allow for an alternative position of 'substantial completion'.

On construction management contracts, a separate certificate of practical completion must be issued for each trade contract. This means there may be a number of defects liability periods. The same is true on management contracts, where each works contract must be certified individually.

Roles in construction projects: analysis and terminology, by Hughes, W. and Murdoch, J. R, published in 2001 by the University of Reading, suggests that the term ‘maintenance period’ is: ‘A misleading synonym for defects liability period (the contractor is not usually obliged to maintain what has been built).’

[edit] Related articles on Designing Buildings

• Base construction.
• Certificate of making good defects.
• Completion date.
• Contract administrator.
• Defects.
• Defects correction period (NEC).
• Defects list.
• Extended aftercare.
• Handover to client.
• Initial aftercare.
• Latent defects.
• Liquidated damages.
• Maintenance.
• Migration strategy.
• Making good.
• Opening up works for inspection and testing.
• Performance in use.
• Post project review.
• Practical completion.
• Remedial work.
• Retention.
• Retention bond.
• Schedule of defects.
• Soft landings.
• Substantial completion.
• What is a final account.

Comments

My understanding is that under JCT SBC the Contract Administrator is responsible for identifying defects (clause 2.38) rather than the Main Contractor.

This is a complex issue. The contract administrator does have the power to instruct the contractor to rectify defects. However, it is the contractor's responsibility to complete the works in accordance with the contract documents - that is, without defects. The end of the defects liability period does not mean the contractor is no longer liable for defects, only that they do not have the right to return to site to correct them.

This is why the article includes the suggestion that the contract administrator makes clear in any schedule of defects that it is not a comprehensive list of all defects. Otherwise the contract administrator would effectively be taking on a supervisory role.

However, the case of Pearce and High v Baxter suggests that the contractor may not be liable for the full cost of rectifying defects after the defects liability period if they have been prevented from rectifying them themselves during the defects liability period. This uncertainty means it is in the employer's interests to try to identify defects and have them rectified during the defects liability period.

what happens if the defect liability period is over and we have not received any formal defects list? Is the CA under contract to issue the defects list giving enough time for the contractor to complete the works before the defect liability period ends?

It depends what it says in the contract.