Warranties form part of nearly every construction contract yet
they remain poorly understood by many stakeholders in the
construction industry. Despite this lack of knowledge, courts have
had little hesitation in enforcing warranties. As a result,
understanding the risk inherent in providing a "warranty"
is critical.
A recent decision highlights the risk posed by a contract
warranty. In Greater Vancouver Water District v. North
American Steel and Pipe Ltd., the GVWD contracted with North
American to supply steel pipe for a waterworks project. The GVWD
and its consultants had prepared the design and specifications for
the steel pipe that was to be supplied by North American. In
the contract, North American gave two relevant warranties to the
GVWD with respect to the steel pipes. First, North American
warranted that the steel pipes would conform to the specifications;
and second, that they would be "free from all defects arising
at any time from faulty design in any
