National Roofing Legal Resource Center

Contract provision addresses warranty effectiveness conditioned upon receipt of payment

When seeking to obtain payment, roofing contractors sometimes withhold furnishing the contractor’s and/or manufacturer's warranty in an effort to induce the owner or general contractor to release payment to the roofing contractor. Contractors should be mindful that failure to provide a contractually required warranty is likely to be considered a breach of contract such that the roofing contractor is not entitled to full payment and exposes the roofing contractor to potential damages resulting from a claim for breach of contract. Although temporarily withholding a warranty might be an effective means to induce payment, roofing contractors should be aware that failing to provide a contractually required warranty or guarantee puts the contractor in the position of failing to perform fully the construction contract.

To induce payment and avoid incurring additional expenses on a job where payment has not been made, the roofing contractor could include the below language in its contract with the owner or general contractor or in the warranty itself, stating the warranty is not in effect until the roofing contractor is paid in full for its work. Many roofing material manufacturers include similar language in their warranties. With the use of such language, a roofing contractor may prompt a general contractor or owner to issue payment in exchange for an effective warranty or engage in negotiations for final payment. Further, by furnishing the contractor’s and manufacturer's warranties, the roofing contractor will also be able to avoid a claim that it breached its contract resulting from failure to provide contractually required warranties.

Warranty effectiveness conditioned upon receipt of payment: Warranties provided by the roofing contractor, including manufacturer warranties, shall not be effective unless and until roofing contractor has been paid in full.


8/30/2017



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