This was a strong pointer against it being an agreement for the “carrying out of construction operations” within section 104 of the Act. Rather it was a warranty as to a state of affairs past or future akin to a manufacturer’s warranty.
But in addition the time at which the warranty is given (before or during or after completion of works) is a factor which needs to be taken into account as likely to influence the construction of the warranty.
As the judge said:
“Whilst contractors and beneficiaries should negotiate the contents of their collateral warranties with some caution if they want them not to fall within the Act, the timing as to when they are executed is also important. On the facts of this case I cannot see how applying commercial common sense a collateral warranty executed four years after practical completion and months after the disputed remedial works had been remedied by another contractor can be construed as an agreement for carrying out of construction operations.” Therefore Abbey’s application to enforce the adjudicator’s decision was dismissed. Although then academic, an application by Simply for a stay of execution was refused based on the evidence of Abbey’s financial position. Comment Amongst other things care should be taken when drafting the terms of a warranty to give effect to an intention to provide for (or not to provide for) a right of adjudication. If the intention is to provide for such a right this is best done by introducing an express adjudication provision (which will result in a contractual right even if there is not a statutory right). If it is intended there be no such right, then the obligation being warranted needs to be drafted so as not to require the warrantor to carry out any constructions operations (essentially any work).
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