Is Contract Still King? – Construction Defect Litigation

The Oregon Daily Journal of Commerce “Contract Is (still) King” article raises several interesting topics in the construction defect litigation world.  The article states that in Abraham the Oregon Supreme Court has expanded plaintiff’s ability to sue contractors for damage that they should have “reasonably foreseen.”
At the same time, the ruling affirmed that “contract is still king,” thus giving contractors some ability to obviate future litigation.

  •  Based on this Oregon ruling, a homeowner can hold a contractor liable for damage that isn’t apparent at the time a project is completed.
  • The same ruling permits contractors to protect themselves against litigation by relying on carefully crafted contracts that specifically delimit their exposure.

A few unanswered question that would give a bit more clarity to the case would be, does the contractor violate the building code? Did the structure pass the final building inspection? If it did not pass the final inspection, then in our opinion the homeowner has a case in proving reasonably foreseeable harm, no matter what the contract says. In regards to Florida law, the homeowner is responsible for contractors to pass code inspections.
Unfortunately  even if a contractor may fail an inspection the homeowner has to take the steps to have all inspections pass, which can sound unreasonable and even unfair, but the responsibility is placed on the homeowner even if the homeowner did not know in regards to the failed inspection.
But as the author notes: “Abraham provides protection to contractors by respecting contractual terms.”
This means that contractors who use vague terms in their contracts expose themselves to even “more vague scope(s) of liability defined only as ‘foreseeable harm.’”
So as the author says, “Contract is king!” Let the contractor beware! Tell us your thoughts.