Liability of Contractor for Design Defects

S.B. 219 (effective 9-1-21) amends §§ 59.051 of the Business & Commerce Code and provides that a contractor performing work on projects, other than critical infrastructure facilities (as defined in the Code), is not responsible for the consequences of design defects and may not be required to warrant the accuracy, adequacy, sufficiency or suitability of plans, specifications or other design documents provided to the contractor by a person other than the contractor’s own agents, contractors, fabricators, suppliers or consultants, of any tier.   Any attempt at waiver of the statute is void.

The contractor remains liable for design defects if performing services as a design-builder or to the extent the contractor has contractually accepted design delegation in its contract.  For example, if the contractor has agreed to provide specific design services for certain aspects of the project, such as the fire sprinkler system, HVAC system, or building envelope system, the contractor remains liable for the design.  However, the contractor cannot be required to assume the sufficiency of the design provided by the owner’s designer, whether such designer be an architect or engineer.

The contractor does have a duty and must, within a reasonable period of time of learning of a defect in the accuracy, inadequacy or insufficiency in the design documents, disclose to the owner the existence of any known defect in the plans, specifications or other design documents that is discovered by the contractor, or reasonably should have been discovered by the contractor, using ordinary diligence before or during construction.   A contractor who fails to disclose a defect in the design documents may be liable for the consequences of defects that result from the failure to disclose.

The new statute does not apply to a critical infrastructure facility which includes, among other items, refineries, electric power generating facilities, steel making facilities, oil, gas or chemical production facilities and commercial airport facilities.