Many lawyers are confused by warranty clauses, believing that the presence of a warranty clause in a construction contract means that any claims regarding the workmanship on the project must be brought within one year of substantial completion of the project. This is not the case. In most construction contracts, the warranty clause states that the owner must notify the contractor of any nonconforming work within one year of substantial completion in order to trigger the contractor's obligation to make repairs without any additional cost to the owner. In most instances, the owner may assert a claim against the contractor for negligent, nonconforming, or defective construction, or for cost overruns, at any time within the applicable statute of limitations. The Arbitration Clause Arbitration has long been the dispute resolution method of choice in the construction industry.
Most construction contracts contain an arbitration clause.
Even if an arbitration clause does not appear in the body of the contract, such a clause may have been incorporated by reference. Paragraph 4.5 of A201 is an arbitration clause. If your client has signed a construction contract that incorporates A201 by reference, your client has agreed to arbitrate any dispute arising out of the construction contract. Most construction contracts require the contractor to provide performance and payment bonds. In a payment bond, the surety promises that the subcontractors and materialmen who have contracted with the general contractor will be paid for their services and materials.