It’s a construction contract, but not as we know it

A recent case is of great interest to those that work within the UK construction industry. It is the first time that the court has considered whether a collateral warranty is a construction contract for the purposes of adjudication within the meaning of the Housing Grants, Construction and Regeneration Act 1996.

In short, it was decided that a collateral warranty entered into between a third party and a contractor amounted to a construction contract for the purposes of the act. As a result, the beneficiary of the warranty (in this case, a tenant of the building) had the statutory right to refer a dispute under the warranty to adjudication, avoiding the need for it to go down the more time-consuming litigation or arbitration route…

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