Back in June last year, the Court of Appeal has held by a majority that a collateral warranty is a “construction contract” under section 104(1) Construction Act 1996. In the case of Abbey Healthcare (Mill Hill) Limited v Simply Construct (UK) LLP [2022] EWCA Civ 823 (21 June 2022), the wording of the warranty in question only used the word “warrants” rather than the phrase “warrants, acknowledges and undertakes”, which, following an earlier case (Parkwood), was a method used to try and avoid being considered a construction contract. However, the definition of “construction operations” under section 104 (1) of the Act was said to include agreements “related to” construction operations rather than agreements solely for construction operations. It was emphasised that a warranty that relates to both past and future performance will qualify as a “construction contract” whereas a warranty that only relates to a “past and static state of affairs” will be insufficient. This is quite significant and could potentially lead to a floodgate of cases going to adjudication concerning collateral warranties. However, the Supreme Court has now granted permission to appeal, so whether a collateral warranty will continue to be a “construction contract” remains to be seen.
JCT Update
The JCT is set to publish new editions of its contracts in due course. They were widely anticipated to be available in 2022, but it looks like publication may not occur until late 2023 or even early 2024. The new editions will cater for recent developments in the sector, such as MMC (modern methods of construction).
In April 2022, JCT published a 2022 edition of its JCT Project Bank Account Documentation (PBA 2022). This can be used with all versions of the Standard Building Contract, Design and Build Contract and Intermediate Building Contract and associated sub-contracts.
This is only intended to be a summary and not specific legal advice. If you would like further information or advice, please do contact a member of our team.
