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The enforceability of extended contractual warranties

by Laina Chan

The practice has arisen in bespoke contracts for infrastructure projects for contractors to provide extended warranties for the works. Such warranties can be staggered depending upon the element that the warranty is being provided for and are particular to bespoke contracts. While such clauses have been included in these contracts for presumably appropriate consideration, there is an issue as to the enforceability of such clauses as they may run foul of applicable limitation periods. For example, section 14 of the Limitation Act 1969 (NSW) prescribes a limitation period of six years for causes of action in tort and for breach of contract. Section 16 of the Limitation Act 1969 (NSW) prescribes a limitation period of 12 years for causes of action founded on a deed. Section 109ZK of the Environmental Planning and Assessment Act 1979 (NSW) however precludes the bringing of a building action more than ten years after the issue of (or when it ought to have been issued) a final occupation certificate. This article explores how the United States, the United Kingdom and Australia have grappled with this issue and considers in light of that jurisprudence whether it is possible to contract out of limitation periods to ensure the enforceability of extended contractual warranties.

The article can be downloaded here

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