The contractor says that, under IC, it has no liability for defects appearing after the end of the rectification period. Is that correct?
The rectification period in all standard building contracts, despite its name, does not signify the maximum period during which the contractor is liable for rectifying defects. It is there for the contractor’s benefit. The rectification period in IC is an example. Under the terms of the contract, the contractor’s obligation is to construct the building in accordance with the contract documents (clause 1.1), which probably consist of drawings and a specification. If the contractor does not comply with the contract documents, amended if appropriate by architect’s instructions, it is in breach of contract.
When the contractor offers the building to the architect as having reached practical completion and the architect has issued a certificate to that effect, the building should have no visible defects and there should be very little work left to complete. The contractor’s licence to occupy the site expires at practical completion and it must leave. If there is anything found to be not in accordance with the contract documents and architect’s instructions at this point, the contractor is in breach of contract.
If there was no rectification period, the employer would have the right to notify the contractor of the defects, seek competitive quotations from other contractors for making good and then have the defects corrected by the lowest tenderer and recover from the original contractor as damages the total cost of such making good, including professional fees. The employer would have the option to request the contractor to make good the defects at its own cost but, in the absence of a rectification period, the employer would not be bound to do so and the contractor would not be bound to make good although it would be liable for the breaches of contract. The contractor’s liability would extend for 6 years from practical completion (12 years if the contract was executed as a deed) in accordance with the Limitation Act 1980.
The rectification period (formerly the ‘defects liability period’ under previous JCT forms of contract) was introduced to give the contractor the right to return to site and make good any defects notified at the end of the period. It is obviously less costly to the contractor to make good its own defects than to pay the cost involved if other contractors do the work. If the employer does not want the contractor to make good such defects, the architect may issue instructions to that effect to the contractor and an ‘appropriate deduction’ is to be made from the Contract Sum (clause 2.10). Unless the reason for the instructions concerns some serious fault on the part of the contractor, such as failure to act despite several reminders, the deduction from the Contract Sum can be only what it would have cost the contractor to make good.
It is clear from the contract that the contractor’s right to return to site extends only to those defects that appear during the rectification period. Any defects that appear afterwards are still breaches of contract and of course the contractor is still liable for them to the end of the limitation period. The employer is entitled to deal with them as though there was no rectification period as noted above.