I am a building contractor. One of my clients, a nationalized bank has included a clause of defect liability in the agreement and also refers to guarantee. Please inform what is meant by defect liability, guarantee and warrant period?
- by Raja Reddy, Guntur
Defect liability period means the period in which quality of construction is tested/verified. This period would be generally for 6 months including rainy season. During defect liability period the builder will be liable to rectify any defects noticed in the construction like seepage of water, structural cracks in the walls. The purchaser will retain a portion of the consideration amount which will be released only after the lapse of the defect liability period.
Guarantee is a contract which is personal in nature between the individuals, companies, firms. Guarantor would always be a third person, who is liable to compensate in case of any loss suffered. The word surety is also used instead of guarantee. This practice is prevalent mostly in financial transactions and performance contracts.