Acceptance of Work and Waiver of Defects

When the owner “accepts” the contractor’s work, he generally waives any claims he may have with respect to the contractor’s performance. In the construction industry, “acceptance” by the owner is not confined to the owner’s express approval of the work that is in accordance with the construction contract provisions. He can also expressly accept work that contravenes the terms or conditions of the contract. If the owner accepts work that does not comply with the construction contract, he thereafter waives a claim based on the contractor’s failure to adhere to the contract’s terms in construction.

“Acceptance” can be found by implication. Based on the owner’s actions or inaction, a court can find that he tacitly approved and accepted the contractor’s work. For example, consider the owner who has actual knowledge that a certain color of roof tile, different from that specified in the parties’ contract, was used in the construction of homes in a residential development. The owner’s silence with respect to the roof tile color could indicate his acceptance of the work using the different colored tile.

It has been generally held that an owner’s progress payment to the contractor or the owner’s use of the project structure do not equal his “acceptance” of the work with the attendant legal ramifications. Further, even though an owner may accept the contractor’s work, he does not thereby waive any claim he may have for latent defects that are not readily discoverable. He also does not waive any patent defects that were not included in the acceptance. The owner’s acceptance does not absolve the contractor of its warranty obligations.