A recent Illinois State Court of Appeals decision has highlighted the distinction between providing a product for sale to the public on the one hand, and providing a service under a contract on the other. Many design firms are now branching out to market and deliver their own products, satisfying a growing market for prefabricated structures, substructures, and building systems while taking advantage of developments in manufacturing coordination. Historically, architects involved solely with design have enjoyed immunity from expanding breach of warranty doctrines. But, as designers enter the stream of commerce to deliver fully manufactured products, that protection may disappear. When they do, design firms may subject themselves to liability for implied warranties and strict liability, concerns typically reserved for manufacturers and builder-sellers. Design firms need to make sure their products are priced to account for this risk and that they are insured for it. Sophisticated customers ordering prefabricated structures, substructures, and building systems from design firms or their subsidiaries should seek proof of the same.

In Board of Managers of Park Point at Wheeling Condominium Ass’n v. Park Point at Wheeling, LLC, 2015 IL App (1st) No. 123452, ___N.E.3d___, 2015 WL 9589615 (December 31, 2015), a condominium homeowners association sued an architecture firm for defective design leading to water and air infiltration. The architecture firm had designed the 128-unit complex in 2000, and construction had commenced from 2001 to 2004. The architecture firm did not take part in the construction or sale of the units. Continue Reading Design Professional Firms Selling Prefabricated Accessory Dwelling Units, Building Substructures, or Micro Homes May Be Liable for Breach of Implied Warranty, or Strict Product Liability.

Oregon’s case law regarding implied home warranties have long floated derelict, lacking the clarity needed for effective consumer protection and simultaneously subjecting developers to uncertain liability.  Now 40 years since Oregon’s adoption of implied warranties, recent decisions from other states focus our attention on the lack of evolution and refinement here in Oregon.

Warranties and Implied Warranties Generally

The term “warranty” describes a right of correction or repair associated with the purchase of a specific item.  Warranties are typically written, describing the scope of the protection, the time period, and the logistics of making a claim.  Common examples are folded-paper inserts found in consumer purchases such as toasters and televisions, the language of which is remarkable for uselessness and indecipherability.  However, most consumers do not realize that the law provides warranties not found in any fine print: so-called “implied warranties.”  Implied warranties for consumer goods are found within the Uniform Commercial Code (“UCC”) adopted throughout the United States.  These UCC implied warranties are almost perfectly uniform in language and interpretation, which makes them fairly predictable for both consumers and manufacturers.

Home Warranties Specifically

Implied warranties in home purchases are far less uniform and less predictable.  Continue Reading Unwritten Rules: Oregon Could Learn How Implied Warranties are Done from Iowa