Collateral Warranty Is Held To Be A "Construction Contract"

Summary and implications

The Technology and Construction Court (TCC) considered the meaning of a "construction contract" and "construction operations" in sections 104 and 105 of the Housing Grants, Construction and Regeneration Act 1996 (as amended) (HGCRA) and held on 29 August 2013 that a deed of collateral warranty was a construction contract under the meaning of the HGCRA.

• This has various potential implications, claims under collateral warranties may be referred to adjudication under the HGCRA.
• Not every deed of collateral warranty will automatically be a construction contract, it depends on the specific wording.
• The implication of HGCRA payment provisions into collateral warranties is an academic issue raising only an entitlement to stage payments of the sum payable under the collateral warranty (nominal if any), not an obligation to pay based on works value.