## Facts

- A professional builder-vendor built a new house on a lot he purchased in North Little Rock, Arkansas, and sold it to the first purchasers for $28,500.
- The house was constructed on a concrete slab; the heating and air-conditioning ductwork was placed in the ground beneath the slab before the slab was poured.
- After the buyers moved in, heavy rains caused water and fill material to enter the embedded duct system and flow through floor vents into the interior, damaging the house.
- The condition was latent and not apparent at the time of sale.
- The buyers sued the builder-vendor for damages, asserting liability based on an implied warranty applicable to new-home sales.

## Issues

1. Whether a builder-vendor selling a newly constructed home to the first purchaser gives an implied warranty of habitability/sound workmanship, displacing caveat emptor for that transaction.
2. Whether a printed contract clause relied on by the builder-vendor effectively disclaimed any implied warranty as to latent construction defects.
3. Whether alleged failure by the buyers to mitigate damage (e.g., by installing a pump) barred or reduced recovery.

## Decision

- The court affirmed the judgment for the buyers and upheld damages of $1,309.
- Arkansas recognized an implied warranty running from a builder-vendor to the first purchaser of a new home, rejecting strict caveat emptor in that setting.
- The contract language invoked by the builder-vendor was not a clear and effective disclaimer of the implied warranty for unknown latent defects.
- Mitigation evidence affected the amount of damages, not the existence of liability; the award was not disturbed.

## Legal Principles

- In a sale of a newly constructed dwelling by a builder-vendor to the first purchaser, the law implies a warranty that the home was built in a workmanlike manner and is reasonably fit for habitation.
- The implied warranty particularly addresses latent construction defects not reasonably discoverable by the purchaser at the time of sale.
- A purported disclaimer of the implied warranty is construed strictly against the drafter and is ineffective absent clear, specific language that fairly alerts the buyer to the risk-shifting for latent defects.
- Failure to mitigate generally goes to reduction of damages rather than eliminating the builder-vendor’s liability for breach of the implied warranty.

## Conclusion

The court held that Arkansas law implies a warranty of habitability and sound workmanship in the sale of a new home by a builder-vendor to the first purchaser, refused to treat a general printed clause as a waiver of that protection for latent defects, and affirmed a reduced damages award reflecting mitigation-related evidence.


Wawak v. Stewart, 449 S.W.2d 922 (Ark. 1970)