This old Spearin case is still being applied almost daily in federal government contracting, and, under different guises, in private construction projects.
For obvious reasons, owners have been trying for many years to find ways to avoid or diminish the doctrine announced in the Spearin case. Some of the contract language they have used includes the following:
- The contractor shall perform all work necessary for a finished project.
- Anything shown in the drawings or specifications shall be treated as if shown in both.
- Any defects or omissions in the specifications discovered by contractor shall be promptly disclosed to the owner.
In other instances, owners, through in a catch-all clause, try to overcome errors in the specifications, such as “contractor shall comply with all applicable codes.”
The warranty of specifications
When an owner has specifications prepared for bid, he is making a promise (warranty) to the bidders that the details given are accurate and are adequate to produce the results the owner wants. This concept is important to know.
There has been confusion created when other arguments, besides warranty, are used to justify the contractor’s reliance on the plans given to him.
The owner’s “superior knowledge” of the technical aspects of the plans, and the fact that the owner’s engineers and architects spent months in the preparation of the plans, are attractive debating points. However, the Spearin Doctrine (the warranty of specifications) applies even though the contractor may have greater expertise than the owner. This point was made clear in Consolidated Diesel Elec. Corp., 67-2 BCA ¶6669:
“The Government cannot be relieved from its responsibility for the proper preparation of the advertised specifications on the ground that the successful bidder is more of an expert on the item involved than is the Government.”
The argument of “impossibility” is also wrong. It has been argued that it is impossible to achieve the result required by the owner by following the owner’s plans. The legal concept of impossibility is complex and not well-suited to a defective specification issue.
In one case, the Armed Services Board of Contract Appeals applied Spearin and stated, succinctly: “There is no necessity in this case for a leap into the complicated, turbulent and esoteric seas of ‘impossibility’” [Dynalectron Corp., 69-1 BCA ¶7595].
Dynalectron is interesting as it also involved a mix of performance and design specifications. The distinction will be discussed.
By any other name
At about the time Spearin was heading up legal channels to the U.S. Supreme Court, a decision in Minnesota came to a Spearin conclusion. In Friederick v. County of Redwood, 190 N.W. 801 (Minn. 1922), the court held:
“[A contractor] cannot be held to guarantee that work performed as required by [the plans and specifications] will be free from defects ... or accomplish the purpose intended. Where the contract specifies what he is to do and the manner and method of doing it, and he does the work specified in the manner specified, his engagement is fulfilled... .”
Methods v. materials
Many of the warranty of specifications cases involve details on the method of construction. The contract drawings depict foundation design, dimensions of ducts or the number of sprinkler heads, for example. In those instances, owners have unsuccessfully argued that the contractor’s express contract warranty for a complete, operating building or system should take priority over the implied warranty of Spearin.
Using the vernacular, a court applying Indiana law has ruled that the implied warranty of specifications is so powerful that it “trumps” an express contractual warranty [Trustees of Indiana University v. Aetna Cas. & Sur. Co., 920 7.2d 429 (7th Cir. 1990)].
This Indiana decision is significant as it applies the Spearin Doctrine to the owner’s choice of materials. The university had specified the brick it wanted for a campus building by the manufacturer’s name and brick type. The brick began to disintegrate and the owner claimed that the contractor breached his express warranty that all work “will be of good quality.”
In fact, the brick was not of suitable quality for exterior use. Citing cases from Florida, Wisconsin and government contracting, as well as from Indiana, the Seventh Circuit Court of Appeals rejected the university’s argument.
“Spearin’s teaching concerning the effect of detailed specifications has been extended to situations in which the ‘defect’ in the specifications was the naming of materials that themselves had a latent defect... .”
Still other cases apply Spearin to specified equipment, such as electronic devices as in Telecommunications Servs. Inc., 77-2 BCA ¶12, 847, where a camera specified by the government did not operate as planned.
Few owners are comfortable with a pure performance specification. Most commonly, specifications contain a mix of both design and performance criteria. For example, a lighting contract may set forth the exact fixtures to be used, but it would leave routing and hanger decisions to the contractor.
That being said, normally a true “performance” specification is outside the limits for the use of Spearin. Where the owner says “this is what I want to achieve” and the contractor says “I can do it,” the owner is making no promise/warranty concerning the installation.
However, where the owner adds restrictions by selecting materials, equipment, devices, etc., those restrictions implicate the design warranty. The courts have found that specified gaskets for a tunnel liner created a design warranty for a design/build tunnel project; the selection of roofing materials created a design warranty; the selection of thread was a warranty for a clothing manufacturing plant; and specifying a specific transformer, pipe and panelboards created warranties for their use.
One decision listed three types of specifications: design, performance and purchase description [Monitor Plastics Co., 72-2 BCA ¶9626]. In truth, the third type, purchase description, is simply a “design” by the owner. As the BCA ruled, “[u]nder this specification, if the contractor furnishes ... the specified brand name... the responsibility for proper performance generally falls upon the Government.” The “generally” means that the contractor must show he used the specified product correctly.
Errors and omission in the drawings and specifications may be the single largest cause for claims. As a result, owners are always looking for ways to get contractors to share the risks of this problem. The Spearin Doctrine has been a moderating force.
As important as the implied warranty of specifications is, however, it is not the answer to all disputes. Questions of latent versus patent errors or ambiguities, differing conditions, the effects of design/build components, and other legal and practical concepts remain. These other issues have been the subject of prior articles and will be revisited in the future. EC