Winward Fearon on Collateral Warranties (eBook)

Winward Fearon is a firm of lawyers based in London. Its construction law team gives advice to the construction industry and the construction professions. Collaterial Warranties has been written by David Cornes and Richard Winward. David Cornes is a solicitor and a partner in Winward Fearon. He was a civil engineer for ten years before becoming a lawyer. He advises construction industry clients nationally and internationally, acts as mediator and sits as an arbitrator. Richard Winward is a solicitor and is also a partner in Winward Fearon. He has spend some 28 years specializing in national and international construction disputes and projects. He accepts appointments as arbitrator. Both David Cornes and Richard Winward have written articles and lectured extensively to the construction industry and its professions on construction law issues.

Preface viii

1 Principle of Law 1

Definition of collateral warranty 1

A comparison of contract and tort 4

Essentials of a contract 5

Form of contract 20

Construing a contract 22

Implied terms 27

Letters of intent 28

2 The Rise of Collateral Warranties 31

Negligence 31

1932 to 1988 33

D & F Estates Limited and Others v. Church Commissioners for
England and Others 36

Murphy v. Brentwood District Council 38

1990 to 2000 41

3 Contracts (Rights of Third Parties) Act 1999 47

The background 47

Contracts (Rights of Third Parties) Act 1999 50

Aspects of the Act 56

Using the Act or not using the Act? 59

4 Assignment and Novation 64

Future purchasers and tenants 64

Assignment 64

Prior equities 70

Restrictions on assignment 71

Novation 80

5 Reasonable Skill and Care and Fitness for Purpose 83

Reasonable skill and care 83

Fitness for purpose 88

Dwellings 93

6 Damages and Limitation of Action 94

Damages 94

Expectation interest and reliance expenditure 108

Mitigation and assessment 112

Assignment 117

Contribution and apportionment 125

Limitation of Action 129

7 Developers, Tenants, Purchasers and Funds 134

The position of a developer 134

The position of a tenant 137

The position of a purchaser 143

The position of the funding institution 145

Obligations to enter into collateral warranties 147

JCT enabling clauses 149

8 Insurance Implications 153

Principles of professional indemnity insurance 153

Disclosure of collateral warranties 155

Particular insurance problems 157

Other matters of concern to insurers 161

Policy endorsements for collateral warranties 162

Problems on changing insurers 166

9 Typical terms 167

General considerations 167

Typical terms 174

Contractors and sub-contractors 199

Guarantees of obligations under warranties 200

10 Practical Considerations 201

Does a warranty have to be given? 201

Commercial balance 203

Legal costs and consideration 203

Negotiating and insurance 204

Warranties must be executed 204

The givers, receivers and contents of warranties 205

Standard forms of collateral warranty 207

Commentaries 211

11 Other Solutions: Present and Future 228

Possible solutions - the present 228

Possible solutions - the future 234

Table of Cases 306

Table of Statutes & Statutory Instruments 332

Index 334