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ARTICLE · 27 SEPTEMBER 2024

Legal Developments In Construction Law: September 2024

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The UK Supreme Court ruled that collateral warranties typically do not qualify as "construction contracts" under the Construction Act unless they involve distinct construction obligations beyond the original building contract. Most warranties remain outside the Act, providing legal clarity.

United KingdomReal Estate and Construction
Richard Craven
Richard Craven
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1. Supreme Court puts collateral warranties in their place

Can a collateral warranty be a "construction contract" under the Construction Act, an agreement for the carrying out of construction operations? No is the answer from the Supreme Court, unless, that is, there is a separate or distinct obligation to carry out construction operations for the beneficiary, not one which is merely derivative and reflective of obligations owed under the building contract.

The Court said that, as a generality, it is difficult to see how the object or purpose of a collateral warranty is the carrying out of construction operations. Its main object or purpose is to afford a right of action in respect of defectively carried out construction work, not the carrying out of such work.

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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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