The Importance Of Being Earnest About Collateral Warranties



A local authority intended to sell land, which had previously been used as a residential education centre for development into housing. They commissioned the Defendant to provide a geotechnical report which was then used for marketing the site. The Defendant was going to provide collateral warranties in relation to this to the ultimate purchasers, but had not agreed to assign the benefit of the report to the purchaser of the site.

The Claimant was a national housebuilder who purchased the site. During clearing of the site it was discovered to include materials containing asbestos. The report had shown that there was a lesser risk of asbestos on the site then there actually was and thus the cost of remediating was higher than estimated. The Claimant wanted to recover these additional costs from the

Court action

Defendant although there was no contractual link between them; the Defendant was not the seller, he merely produced a report for the seller. The Claimant housebuilder therefore brought a case claiming the Defendant owed it a duty of care in relation to the report which had been negligently prepared. Had they known about the asbestos they would have negotiated a lower purchase price.

The court dismissed a professional negligence claim holding that the Defendant did not owe the Claimant a duty of care in...

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