Is a “collateral warranty” a “construction contract” under the Housing Grant, Construction and Regeneration Act 1998, such that a beneficiary of a warranty can bring a direct claims against a contractor through adjudication?
The recent case of Parkwood Leisure vs Laing O’Rourke Wales and West, ruled that a collateral warranty can be a construction contract for the purpose of the HGCR Act. However not all collateral warranties given in connection with developments would be construction contracts under the Act.
The decision in the case of Parkwood, hinged on the following key points: statutory interpretation (the collateral warranty must be both a contract and also relate to construction operations), construction of the warranty (it must be more than a simple warranty) and the timing (the collateral warranty was more than just a warranty for the works already completed).
It is more likely to be a construction contract if it refers to future works to be completed. But this is not the only factor the court would review. The only real impact is whether any warranty disputes would be adjudicated rather than litigated.