Collateral Warranties: UK Case Law

Steven Walker QC and Marc Lixenberg

August 2014

A paper presented to the Society of Construction Law at a meeting in Edinburgh on 4th June 2014

This paper considers a number of UK cases relating to collateral warranties - which (despite the Contracts (Rights of Third Parties) Act 1999) are much used in construction projects. First, it considers the cases which have looked at 'no greater liability' and 'net contribution' clauses and limitations on assignment; it then looks at two other aspects which have received judicial attention, namely whether a collateral warranty is a 'construction contract' for the purposes of the Housing Grants, Construction and Regeneration Act 1996 and what remedies are available to procure a collateral warranty where a party has contractually undertaken to provide one. The cases covered include Friends Provident v McAlpine, Safeway Stores v Interserve, West v Ian Finlay, Royal Bank of Scotland v Halcrow, Co-operative Group v Birse, Parkwood Leisure v Laing O'Rourke and Liberty Mercian v Cuddy.

Introduction - 'No greater liability' clauses - 'Net contribution' clauses - Limitations on assignment - Is a collateral warranty a 'construction contract'? - Remedies for enforcing agreements to provide collateral warranties - Conclusion.

The authors: Steven Walker QC and Marc Lixenberg are barristers practising at Atkin Chambers, London.

Text: 16 pages