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ARTICLE · 18 SEPTEMBER 2013

Collateral Warranties – A Change In Direction

MacRoberts
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Following the publication of the recent decision, Parkwood Leisure Limited v Laing O'Rourke Wales and West Limited, some collateral warranties can now be considered construction contracts if the warranties constitute contracts for the carrying out of construction operations.

United KingdomReal Estate and Construction
David Wilson
David Wilson
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29 August saw a change in the way collateral warranties are viewed.  Previously collateral warranties were not generally thought of by most people as construction contracts under the Housing Grants, Construction and Regeneration Act 1996 ("the Act"). Following the publication of the recent decision, Parkwood Leisure Limited v Laing O'Rourke Wales and West Limited, some collateral warranties can now be considered construction contracts if the warranties constitute contracts for the carrying out of construction operations.

Parkwood Leisure v O'Rourke: The Facts

Laing O'Rourke (the Contractor) entered into a standard JCT Design and Build contract (the Contract) with Orion Land and Leisure (Cardiff) Ltd (the Employer) to design and build a swimming and leisure facility (the Works). It included a collateral warranty under which the Contractor undertook to "carry out and complete the Works in accordance with the Contract" (Article 10). In 2008 the Employer entered into a

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