1. 2014 Construction Law Conference:
Building Regulations, Collateral Warranties and
Third Party Rights
Thursday, 6 February 2014
Kate Wansbrough-Jones, Senior Associate
kate.wansbrough-jones@olswang.com | +44 20 7067 3773 | @hardhatlawyer

2. Building Regulations Update
• Future of Code for Sustainable Homes?
• Part L of Building Regulations has tightened targets for CO2 emissions from
domestic and non-domestic buildings by 6% and 9% respectively
• Government side-stepped the important questions such as Allowable Solutions
and Quality Assurance Certification
• It might be a welcome step in the right direction but will this set the ball rolling to
achieve the target of 100% zero carbon new homes by 2016
#olswangconstruction
www.constructiveblog.com

3. Collateral Warranties
• Gives a right of action against the contractor and design team if you’re not party
to a contract
• Popularity stems from the overriding principle of doctrine of privity of contract
• Came about because a number of cases about in 1980’s decided that outside of
any contractual relationship between claimant and defendant, there is no general
duty of care to avoid causing defects in buildings which could cause economic
loss to persons who acquire or use them
• BUT, they impose a burden on the development industry through the time it takes
to negotiate and deal with the administration of getting them signed and provided
(often by a particular long-stop date)
#olswangconstruction
www.constructiveblog.com

4. Third Party Rights
– how did they come about?
• Contracts (Rights of Third Parties) Act 1999
• Provides that a person who is not a party to a contract may in his own right
enforce a term so the contract if it expressly provides that he may, or purports to
confer a benefit upon him
#olswangconstruction
www.constructiveblog.com

5. Third Party Rights- why are people
still reluctant to use them?
• They still haven’t been tested in court (although note the Contracts (Rights of
Third Parties) Act 1999 expressly referred to construction contracts as being one
of the beneficiaries of the act)
• Bank’s generally wary of efficacy of step-in rights so if funding is being used on a
development, the option of giving a bank a warranty has to be there.
• There is often a concern that they might unintentionally confer rights upon
unintended beneficiaries
• Difficult to change traditions. Some people prefer a ‘tangible’ document rather
than a notice.
#olswangconstruction
www.constructiveblog.com

6. Third Party Rights
– why should they be used?
• The concern that they might unintentionally confer rights upon unintended
beneficiaries can be easily overcome by specifying the number and identity
beneficiaries to whom rights can be conferred
• Easier
• Quicker
• Cheaper!
#olswangconstruction
www.constructiveblog.com