Will Collateral Warranties Be Construction Contracts?
Published by Construction Law
Published by Construction Law
In this article published by Construction Law, Scott Stiegler, Bradley Lindsay and Xara Kaye discuss the recent Supreme Court ruling from July 2024, which clarifies that collateral warranties derived from primary building contracts are not considered “construction contracts” under the Housing Grants, Construction and Regeneration Act 1996. This ruling overturns previous decisionswhich had allowed collateral warranties to be treated as construction contracts for adjudication purposes.
The Supreme Court’s decision emphasises that collateral warranties typically do not involve the carrying out of construction operations but rather serve to provide a right of action regarding defects. As a result, adjudication is not automatically available unless express provisions are included. This ruling provides certainty but may push parties to include explicit adjudication clauses in future warranties. It also raises potential implications for existing disputes and financial arrangements in construction projects.
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This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.