It was expressly stated in a report laid before Parliament (as far back as 1970)[1] that:

…On the sale of premises which include a completed building there is no implied warranty of any kind as to the condition of the premises or their suitability for any particular purpose; and this rule applies where the vendor is himself the builder.

Under the doctrine of ‘caveat emptor’ (let the buyer beware) the prospective purchaser must take the premises as he[2] finds them unless he makes express provision regarding the condition of the premises in his contract with the vendor.

In the absence of such provision he will have a remedy only if he can establish fraud, negligent mis-statement or, under the Misrepresentation Act 1967, non-fraudulent misrepresentation.

In a contract for the sale or letting of premises to be constructed or completed by the vendor or the lessor there is, however, prima facie an implied term that the work will be done in an efficient and workmanlike manner, that the builder will supply and use proper materials and, in some circumstances, that the building will be fit for the particular purpose for which, to the knowledge of the builder, it is to be constructed.

The implication as to fitness for purpose is most readily made in the case of a dwelling[3], and in such cases, unless the surrounding circumstances clearly exclude it, the implication is that the house will be fit for human habitation.

These implied terms may, however, all be varied or excluded by the terms of the contract, either by express exclusion or, more usually, by particular specification, which oust their implication...

It can be seen that the contract of sale is a very important agreement between house-builder and purchaser.

In the operation of the law it was noted (in 1970) that considerable disquiet had, been expressed before 1970, in relation to the purchase of dwellings.

It was also stated that:

a.     The traditional justification for the principle ‘caveat emptor’ is that a purchaser of a completed building can see what he is buying and does not rely upon the skill and knowledge of the vendor. If he wishes to satisfy himself as to its condition he is well able to have it surveyed and to ascertain its condition;

b.     Moreover, the Purchaser knows, and the vendor may not, to what use he intends to put the premises. He can judge their suitability for his purpose and negotiate the price accordingly;

c.     While this justification may still apply to the sale or letting of commercial or industrial premises it is necessary to reconsider whether at the present time it has the same force in relation to dwellings;

d.     For the last 25 years there has been a shortage of living accommodation and the purchaser’s bargaining position has become correspondingly weaker.

After concluding that ‘caveat emptor’ should remain the law in respect of e.g. dwellings that are not newly constructed, in relation to newly built dwellings, the position was expressed to be entirely different and there was no reason why a person who acquires a dwelling from the builder should have to examine it in detail to see whether it is in a sound condition.

The purchaser should be entitled to rely on the diligence and skill of those whose work has gone into the provision of the dwelling and he should have a remedy if the dwelling proves to be defective.

The report concluded that the purchaser, in such circumstances, should have greater protection from the law, than he had in 1970, in respect of defects of quality.

Sensibly, attention was directed to imposing obligations to build properly upon those who are engaged in the provision of new dwellings, rather than to propose the introduction of rights of action against those who sold dwellings, when they themselves might not have engaged in carrying out or procuring the carrying out of building work.

The first approach would justify applying the same principles of liability to the builder/ vendor or the developer/ vendor, as to the builder who builds to the order of another. It is this course which was adopted in the new legislation that was proposed in the report and was introduced by Statute in 1972.

Next Section: House-builders’ Obligations Concerning Quality

[1] Reflecting the law in 1970.

[2] Apologies for ‘he’ and ‘him’ but I am reflecting what the report says.

[3] Thus, including houses and apartments.