Under most construction contracts, the contractor takes on the ground conditions risk. However, a recent case has demonstrated that the risk can fall on the employer.
Many LSVT Registered Providers (“RPs”) have come of age – or will soon be coming of age -after delivering their offer document promises. This provides RPs with the perfect platform to start to work towards a more mature, business like, relationship with their transferring council.
A potential hurdle to this fundamental development step is any outstanding financial liability owed to the RP by the councils under the stock transfer agreement. As part of the stock transfer process, councils provide various warranties and/or indemnities in favour of the RP; most notably dangerous substances, including asbestos. What steps can, and should, an RP take when a warranty is found to be inaccurate, or breached, or an indemnity limit reached?
Understandably, many RPs are reluctant to ‘rock the boat’ due to the need for a continued working relationship with their council on issues such as planning consent for planned development. However, can RPs realistically ‘look the other way’ when a potential claim exists with the consequential financial implications for the organisation?
Stepping out of a council’s shadow by bringing such a claim will inevitably cause some friction; however, the appropriate management of claims can ensure that a working relationship with the council is maintained.
With our substantial stock transfer and RPs governance experience we often advise upon, and manage, claims arising out of stock transfer warranties and indemnities. We work with clients to achieve resolution, ideally without having to start Court proceedings. In our experience, the majority of claims are settled by negotiation and/or mediation.
We have successfully negotiated settlements which include both a financial and non-financial element, the latter often seeming to be more valuable to RPs. This could include removing certain council management rights, amending the transfer agreement to enhance the RPs nomination provisions and financial payments in the event of asset sales.
Many stock transfer agreements now include warranties of 30 years duration from the date of transfer and as a result, RPs should actively review their transfer agreements to assess any breaches. Failure to claim for breaches within the standard 12 years limitation period will prevent an RP from successfully pursuing a claim.
For more information
If you wish to discuss your position, or suspect your council may be in breach of a warranty or indemnity please contact Hilary Harrison.
The UK Government has been consulting on how it should promote social value in its procurements. Here is our response that we submitted to the consultation...
The Tenant Fees Act 2019 came into force on 1 June 2019.
A recent case in the Court of Appeal will no doubt bring a sigh of relief for employers, but a corresponding sigh of disappointment may be uttered for equality and gender balance in the workplace.
This briefing assists response to the consultation paper by outlining the consultation questions, providing some background information and prompting some thoughts and potential answers.
A report published on 29 May by the Institute for Fiscal Studies (IFS) has found that since 2009-10, local government spending on services has fallen on average by 21% in real terms.
A long-awaited decision of the Court of Appeal has clarified that a lower standard of proof should apply than previously thought before an Inquest can return a conclusion of suicide.
New regulations come into force on 1 June 2019, amending the Section 21 (s21) prescribed form template for use with assured shorthold tenancies.
In a challenging economic climate with continuing budget cuts and increasing expectations of staff, sickness absence remains an ongoing problem that is important to address.
Social housing providers will routinely have a number of construction projects underway at any one time. It is essential for client teams to understand and avoid key contract management pitfalls.
To receive invitations to our events, as well as information and articles on legal issues and sector developments that are of interest to you, please sign up to Newsroom.