Owner's Defense of Design Deficiency vs. Contractor Means and Methods
A design-build contractor delivered a warehouse whose slab cracked within 8 months of occupancy. The owner claims $850,000 in repair and business interruption. The contractor's forensic engineer finds the cracks resulted from the owner's specified concrete mix design (low cement content, high water-cement ratio) combined with the owner's insistence on a fast-track schedule that prevented proper curing. The contractor had flagged the mix design concern in a design review memo but proceeded after the owner's engineer confirmed the mix was acceptable. The contract makes the design-builder responsible for design and construction, but the owner furnished performance specifications and approved the mix. The owner argues the design-builder warranted the result and must bear the loss.
1. Allocate responsibility for the slab failure between owner and design-builder.
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Responsibility is shared but weighted toward the owner. The owner furnished the performance specification and the specific mix design, and its engineer expressly confirmed the mix after the contractor flagged concerns. That constitutes owner direction and arguably an implied warranty of the specification's suitability. The design-builder, however, retained design responsibility under the contract and proceeded despite its own documented concern; it could have refused, proposed an alternative, or sought a written directive. The forensic evidence (mix composition plus schedule-driven curing failure) supports a causation split. A defensible allocation: owner bears the majority for the defective specified mix and fast-track insistence; the design-builder bears a portion for failing to escalate or mitigate. Quantify by separating mix-caused from curing-caused damage.
2. How should the business interruption component be treated, and what defenses apply?
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Business interruption is a consequential loss. Recoverability depends on whether the contract waives or limits consequential damages and whether the loss was foreseeable. The design-builder should check for a mutual waiver of consequential damages, which would bar the $850K BI portion regardless of fault. If no waiver, the owner must prove the interruption was caused by the defect, not by its own operational choices, and must mitigate. The contractor can argue the owner's fast-track direction contributed to the loss and that the owner failed to mitigate by delaying repairs. Separate the repair cost (direct) from BI (consequential) and apply the contract's risk-allocation clauses before any fault-based apportionment.