Why collateral warranties aren’t construction contracts

By Stuart Pemble

It’s fair to say that Akenhead J’s recent decision in Parkwood Leisure Ltd v Laing O’Rourke Wales and West Ltd that a collateral warranty was caught by the Construction Act — so that Parkwood (the warranty beneficiary) was able to commence adjudication proceedings against Laing O’Rourke — has caught the attention of construction lawyers.

Many — and I am one of them — think that the decision is wrong. Central to the judge’s finding were the facts that the warranty: was granted before completion of the relevant works (a swimming pool in Cardiff); and contained wording (‘warrants, acknowledges and undertakes that…’) that the judge (especially relying on the word ‘undertakes’) took to mean that the warranty was an obligation to complete pool and therefore a contract for the ‘carrying out of construction operations’ within the ambit of the act.

And, although the judge was quick to emphasise that his decision rested on the particular facts of the case, it is still open to criticism…

If you are registered and logged in to the site, click on the link below to read the rest of the Mills & Reeve briefing. If not, please register or sign in with your details below.

Analysis from The Lawyer

  • head1

    LPOver and out?

    The trend for unbundling legal work is advancing through the law firm ranks but there is still resistance in some quarters - namely in-house. We asked why

Overview

Fountain House
130 Fenchurch Street
London
EC3M 5DJ
UK

Turnover (£m): 70.90
No. of Lawyers: 335