What is Defects Liability Period?

Full Definition

The defects liability period (sometimes called the "rectification period" in newer versions of some standard forms) is a fixed period, commonly six or twelve months, that begins immediately after practical completion of a construction contract, during which the contractor remains contractually obliged to return to the site and remedy any defects in the works that come to light, at the contractor's own cost rather than the client's. The purpose of the period is practical rather than purely legal: many defects, particularly in a large or complex building, only become apparent once the building is genuinely occupied and used through a full range of conditions -- for example, a roof leak that only shows itself in heavy rain, or shrinkage cracking in plaster that appears as a new building dries out over its first winter -- so rather than requiring the client to identify every conceivable defect at the moment of practical completion, the contract gives a defined window for these issues to surface and be reported. During the defects liability period, the contract administrator typically inspects the building, often shortly before the period ends, and issues a schedule of defects listing everything that needs to be remedied; the contractor is then given a reasonable period to carry out the remedial work, and once the contract administrator is satisfied all listed defects have been properly fixed, a certificate of making good defects is issued. This certificate is significant because it usually triggers release of the remaining retention monies withheld from the contractor throughout the project, and it also often marks the point from which final account negotiations and the issuing of the final certificate can proceed, bringing the contractor's financial and contractual obligations under that specific building contract largely to a close (separate from any longer-term liability, for example, under a collateral warranty, a structural warranty, or ordinary contract or tort limitation periods, which can run for six or twelve years after completion for latent defects not apparent during the defects liability period itself). It is a common misconception that the defects liability period is the client's only opportunity to claim for defective work; in fact, it is simply a contractually convenient mechanism for the contractor to fix known problems cheaply and directly rather than the client having to bring a formal legal claim, and a client can generally still pursue a contractor (or in some cases still make a claim under a warranty) for defects that are only discovered well after the defects liability period has ended, subject to the applicable limitation period. Worked example: practical completion of a new office building is certified on 1 June; the contract specifies a twelve-month defects liability period, so it runs until 31 May the following year, during which the client reports a leaking window seal and a faulty extractor fan, both of which the original contractor is contractually obliged to fix at no extra cost, after which the contract administrator issues a certificate of making good defects and the final retention balance is released.

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