Disputes related to construction warranty are relatively common. Judicial practice shows that the resolution of such disputes is based on legal regulations and the perspective of the Court. In this article, TNTP will analyze some typical disputes concerning construction warranty and the Court’s approach to resolving these disputes.
1. What is a Construction Warranty?
Based on Clause 17, Article 2 of Decree No. 06/2021/ND-CP, a construction warranty is a contractor’s commitment to rectify and repair damages or defects within a specified period during the use and operation of a construction project. Accordingly, the project owner must agree in the construction contract with contractors involved in the project regarding the rights and obligations of the parties related to the construction warranty, the warranty period, the warranty limit, and other relevant matters.
2. Common Disputes Related to Construction Warranties and Court Resolutions
Disputes over construction warranties frequently arise including warranty duration, warranty obligations, and the commencement date of the warranty period.
2.1. Disputes When Warranty Obligations Are Not Specified in the Contract
To enforce a warranty, it is essential to stipulate warranty terms in the construction contract.
In a legal case involving a dispute between individuals, the court dismissed the plaintiff’s claim for the defendant to perform warranty obligations because the contract lacked such agreement. Specifically, during the execution of the construction contract, the defendant was temporarily suspended due to the plaintiff’s failure to pay as agreed. The plaintiff later sued, claiming defects in design, quality, and aesthetics, and demanded warranty fulfilment. In this case, the court rejected the plaintiff’s claim based on the following grounds:
• Clause 2, Article 46 of Decree No. 37/2015/ND-CP requires “contractors are responsible for the warranty of the construction and equipment in accordance with the agreements in the contract. The parties’ agreements on the warranty period and the warranty guarantee level must comply with the legal regulations on construction”.
• In the contract and during the execution of the contract, the parties did not agree on the obligation to warrant the construction. Moreover, the defendant carried out the construction under daily supervision according to the plaintiff’s requirements.
Therefore, the court concluded that the defendant did not breach the contract, and did not accept the plaintiff’s request. This case underscores that warranty obligations arise only when expressly agreed by parties. Without such an agreement, contractors may refuse warranty requests.
2.2. Disputes Over the Timing of Warranty Deposit Refunds
Based on Clause 2, Article 28, and Point (a), Clause 5, Article 29 of Decree No. 06/2021/ND-CP, when the warranty period ends and the contractor fulfils its warranty obligations, the project owner must refund the warranty deposit. However, the decree does not specify the exact date for such refunds.
According to a judgment rendered by the High People’s Court in Ho Chi Minh City, the Court resolved the case by ruling that the warranty deposit should be refunded on the day immediately following the fulfilment of warranty obligations. In this case, the parties had completed the acceptance and handover of the project, and the plaintiff had also fulfilled its warranty obligations. Although the plaintiff made multiple requests for the defendant to fulfil its payment obligation, the defendant failed to comply. Accordingly, the Court made the following judgments and arguments regarding this case: The warranty expiration date was June 17, 2020. The defendant admitted to holding the plaintiff’s warranty deposit, claiming that during the warranty period, the defendant had notified the plaintiff but the plaintiff did not perform the required repairs. However, the defendant failed to provide evidence to substantiate its claims of such notifications. Therefore, upon the expiration of the warranty period, the defendant was obligated to refund the warranty deposit to the plaintiff starting from June 18, 2020 (the day immediately following the expiration of the warranty period).
Thus, the Court resolved the case by requiring the project owner to refund the warranty deposit to the contractor in a timely and good-faith manner.
This article “Some Disputes Regarding Construction Warranties and the Court’s Resolutions” aims to provide value to readers.
Sincerely,
