On certification to the Superior Court, Appellate Division.
For reversal and remandment -- Chief Justice Wilentz and Justices Clifford, Schreiber, Handler, Pollock, O'Hern and Garibaldi. The opinion of the Court was delivered by Schreiber, J.
[98 NJ Page 95] Edward Kawash and Theresa A. Kawash, who owned a home at 479 Weymouth Drive, Wyckoff, New Jersey, decided to add a patio to the rear of their house. They entered into a contract with the Mandara Masonry Corporation (Corporation)*fn1 for the construction of that patio at a cost of $5,000. The Corporation was owned by William S. Mandara, who constructed the addition with his father, Salvatore Mandara, and three other employees. According to the complaint, the patio was constructed in 1974.
Plaintiffs, Richard F. Aronsohn and Deborah Aronsohn, purchased the home from Mr. and Mrs. Kawash in August 1975. The purchase agreement provided that the contract was subject to "a satisfactory engineering inspection," that the agreement was made "upon the knowledge of the parties as to the value of * * * whatever buildings are upon the [land] and not on any representations made as to character or quality," and that "no representations have been made by any of the parties * * * except as set forth herein."
In 1978, plaintiffs noticed that the patio was beginning to separate from the wall of the house; that some of the slate slabs that formed the patio floor were beginning to rise; and that the outside patio wall was beginning to buckle. Plaintiffs then commenced this action against the defendant Corporation and Salvatore Mandara alleging strict liability, negligence, and breaches of express and implied warranties.
At the trial plaintiffs introduced evidence establishing the aforementioned facts and also produced as their expert a building contractor who had made visual inspections of the patio. The patio floor consisted of slate slabs resting on concrete, which had been poured over a dirt foundation. The patio extended along the entire rear of the house, and since the land sloped sharply down away from the house, it had been necessary to build up the ground. The patio was surrounded by a cinder-block wall with brick facing.
The expert's ultimate conclusion was that the construction was improper, in part because the ground supporting the patio had not been adequately compacted. The expert asserted that because the dirt had been improperly compacted, it had pushed out the wall. He also testified that the penetration of water beneath the slabs had contributed to the problem. The water was unable to escape, according to him, because no weepholes had been provided to permit drainage. He estimated that it would cost $16,000 to remove the existing patio and install a new one.
Salvatore Mandara testified on behalf of defendants. He explained how the patio had been built and stated that the construction method accorded with industry standards. He also stated that the patio could have been built in another fashion, but that cost had been a factor for Mr. and Mrs. Kawash. In his opinion the problem was due to the owners' failure to patch up cracks as they appeared; had they done so, he said, water would not have seeped beneath the slabs into the ground, causing the slabs to rise and the wall to buckle.
The trial court granted defendants' motion to dismiss.*fn2 It found that plaintiff's claim on express warranty was flawed because defendants' contract to construct the patio had been with Edward and Theresa Kawash and not the plaintiffs. It ruled that the negligence claim was also defective, reasoning that it was really a suit on the contract as well, since plaintiffs were seeking economic loss, rather than personal injury or property damage. The trial court also held that no implied warranty of habitability or strict liability applied because the philosophy of the law with respect to mass producers of goods or homes was inapplicable to a situation like this one, which involved a service contract.
The Appellate Division affirmed. It agreed that recovery for economic loss on a negligence theory was inappropriate. It also found that neither express nor implied warranty was justified since there was no privity of contract, though it disagreed with the trial court that this was a service contract. Lastly, the Appellate Division agreed that the concept of strict liability was inappropriate under these circumstances.
We granted plaintiffs' petition for certification. 95 N.J. 202 (1983).
Plaintiffs are seeking the benefit of the bargain they made in their agreement to purchase the home. That benefit is based on the previous owners' contract with defendants to construct the patio. This case does not involve sale and distribution of personal property; nor does it involve personal injury or property damage arising out of a traumatic event.
Analysis must start with the agreement defendants made with the Kawashes since that contract, presumably oral, would set forth the nature and scope of the contractor's duties. The repair agreement could describe, among other things, the grade and quality of materials to be used, the manner of installation, and the extent and nature of a warranty. The record does not disclose whether the Kawashes discussed these items with the contractor, although the contractor testified that his method of construction and choice of materials were influenced by the price of the job.
When, as in this case, there is no express contractual provision concerning workmanship, the law implies a covenant that the contract will be performed in a reasonably good and workmanlike manner. The agreement between defendant and the Kawashes concerning the building of the patio thus contained an implied promise by defendant to construct the patio in a workmanlike fashion. See Minemount Realty Co. v. Ballentine, 111 N.J. Eq. 398, 399 (E. & A. 1932) ("Where a party contracts to build a building for a specified purpose, the law reads into the contract a stipulation that the building shall be erected in a reasonably good and workmanlike manner and when completed shall be reasonably fit for the intended purpose."); Schipper v. Levitt & Sons, Inc., 44 N.J. 70, 91 (1965) (home buyer relies on mass housing developer's "implied representation that the house will be erected in a ...