The federal courts have created a doctrine whereby an owner impliedly warrants the information, plans and specifications which an owner provides to a general contractor. This doctrine, entitled the Spearin doctrine, arises from the case of United States v. Spearin, 248 U.S. 132 (1918), and maintains that a contractor will not be liable to the owner for loss or damage which results solely from insufficiencies or defects in such information, plans and specifications.
By example, in the Spearin case, the contractor contracted to build a dry-dock in the Brooklyn Navy Yard. In order to build the dry-dock in the site selected for it, the contractor had to relocate a portion of a sewer which ran through the specified site. The owner, which happened to be the United States Government, provided the plans and specifications containing the prescribed requirements for the section of sewer to be relocated. Subsequently, the contractor completed the relocation of this section of sewer pursuant to the prescribed requirements of the plans and specifications, and the owner approved and accepted the work.
Nearly one year after the relocation of the sewer, a dam in a connecting sewer caused the relocated sewer to flood and burst, thereby flooding the area excavated for the dry-dock. This dam was not shown on the owner's plans and specifications. The Court held that the owner created an implied warranty that, if the contractor complied with the plans and specifications, the relocated sewer would be adequate. The Court further held that the general clauses requiring the contractor to examine the site and the plans and to maintain responsibility for the work until completion did not overcome the implied warranty.
Courts, both federal and state, have since further refined the Spearin doctrine to encompass two specific implied warranties. The first implied warranty is that the plans and specifications are accurate and the second is that they are suitable for their intended use. An owner breaches the first warranty when the actual condition of the site is not as the owner has stated (e.g. if there is a dam in a sewer which is not on the plans and specifications). An owner breaches the second warranty when a contractor accurately follows the plans and specifications to completion, yet, even so, fails to produce a finished project suitable for its intended purpose or satisfactory to the owner. An example might be a contractor who builds a building in strict accord with the specifications and plans provided which is then, when finished, structurally unsound.
In both of the above-listed situations, a contractor may hold the owner liable for the added expense required to complete the project due to the inadequate plans and specifications. The contractor, however, must still show good faith. If the contractor has notice that the plans and specifications are defective, it must notify the owner promptly in order to preserve its cause of action. It should also be noted that courts have determined the Spearin doctrine to apply to private as well as public contracts.
One should not assume, however, that the Spearin doctrine applies in every state. While it is true that the Spearin doctrine is accepted by a majority of jurisdictions, any party undertaking a major construction project should take steps to investigate the issue of owner warranty of plans and specifications in its jurisdiction.
In Massachusetts, for example, two cases with opposite holdings have called the application of the Spearin doctrine into doubt. These cases are N.J. Magnan Company v. Robert J. Fuller, 222 Mass. 530 (1916), and Alpert v. Commonwealth, 357 Mass. 306 (1970). In the N.J. Magnan case, which was decided two years prior to the Supreme Court's decision in Spearin, the Supreme Judicial Court of Massachusetts held that there was no implied warranty attached to the plans and specifications provided by the owner. In so doing, the court stated, "It is the duty of one who proposes to enter into a building contract to examine the contract, plans and specifications, and to determine whether it is possible to do the work before entering into the engagement . . . ."
The Supreme Judicial Court seemingly reversed its stance in Alpert. In the Alpert case, the Massachusetts Court cited to Spearin with approval and held that the owner had impliedly warranted the sufficiency of the plans and specifications, which it had provided to the contractor, for their intended purpose.
The inherent problem is that Alpert did not overrule N.J. Magnan and in fact makes no mention of it. While the Alpert case is more recent and would appear to have greater authority, there still lurks the presence of N.J. Magnan which creates doubt and clouds the issue. In light of this uncertainty, contractors should be wary about relying on the plans and specifications provided by owners and should take all feasible steps to inspect both the plans and specifications and the work site. Additionally, it would be wise for contractors to insist upon written contract clauses warrantying the plans and specifications. In doing so, a contractor might remove some of the risk created by inconsistent case law in Massachusetts.