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Building Act 2004

Consumer rights and remedies in relation to residential building work - Remedies for breach of implied warranty

362O: Meaning of substantial breach

You could also call this:

“This explains when a builder's mistake is big enough for you to cancel the building agreement.”

A substantial breach of warranty in a residential building contract happens in a few situations. You can consider a breach substantial if you, as a reasonable client who fully understands the nature and extent of the breach, wouldn’t have agreed to the contract in the first place.

In cases where the building work is for a specific purpose that you stated in the contract, a substantial breach occurs if the work isn’t suitable for that purpose. It’s also a substantial breach if the quality of the work is so poor that it can’t produce the result you wanted and specified in the contract.

Lastly, if the building work is unsafe, that’s always considered a substantial breach.

These rules help protect you as a client and ensure that the building work meets your expectations and safety standards.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM6371137.

Topics:
Housing and property > Home safety and repairs
Business > Industry rules
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362N: Remedies if breach of warranty cannot be remedied or breach is substantial, or

“If a builder breaks a promise that can't be fixed or is really bad, you can ask for money or cancel the deal.”

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362P: Rules applying to cancellation, or

“This explains how to properly cancel a building contract and what happens when you do.”

Part 4A Consumer rights and remedies in relation to residential building work
Remedies for breach of implied warranty

362OMeaning of substantial breach

  1. For the purposes of section 362N, a breach of warranty is substantial if—

  2. a reasonable client fully acquainted with the nature and extent of the breach would not have entered into the residential building contract; or
    1. in any case to which section 362I(1)(f) applies, the building work—
      1. is unfit for the particular purpose stated in the residential building contract; or
        1. is of such a nature and quality that it cannot be expected to produce the desired result stated in the residential building contract; or
        2. the building work is unsafe.

          Notes
          • Section 362O: inserted, on , by section 56 of the Building Amendment Act 2013 (2013 No 100).