Collateral Warranties In Construction Transactions Webinar

• Published date: 31 January 2022
• Law Firm: Ronan Daly Jermyn
• Author: Ms Finola McCarthy, Georgina Wallace and Alison Bearpark

RDJ Partners Finola McCarthy and Alison Bearpark, alongside Solicitor Georgina Wallace were joined by guest speaker James Burke BL to review the practical issues and risks with collateral agreements and relevant case law surrounding contractual interpretation and limitation clauses.

Below are some key takeaways from that discussion:

Collateral Warranties and their effect

• Creates a direct contractual link between the parties.
• Without a warranty, third party's recourse is solely in tort, where recovery of damages for pure economic loss in Ireland remains uncertain. In Ireland, the decision of Keane CJ in Glencar Exploration plc v Mayo County Council¹ which addressed in obiter comments that the Plaintiff was not entitled to recover for pure economic loss in circumstances where a contractual relationship did not exist between the parties (this case did not relate to collateral warranties).
• In the UK, the case of D&F Estates Limited v Church Commissioners for England² established that a third party could not recover damages for pure economic loss

Standard of Care

• The provisions of a warranty should be consistent with the underlying primary contract.

If the primary contract provides for a standard of reasonable skill and care, be careful not to sign up to a standard of fit for purpose. A construction...