Good news for those providing collateral warranties – beneficiary is time-barred from bringing a claim

In British Overseas Bank Nominees Limited v Stewart Milne Group Limited [2019] CSIH 47 the Scottish Inner House overturned the Outer House’s original ruling and held that the limitation period under an underlying contract also applied to a collateral warranty. This brings the Scottish approach in line with that adopted by the English courts in the earlier case of Swansea Stadium Management Company Ltd v City & County of Swansea and another [2018] EWHC 2192 (TCC) which held that the limitation period ran from the date of the original building contract, thus giving clarity and certainty as to the scope of the contractor’s liability (click here to read our previous article on this case).

This case will allay any concerns that may have arisen following the first instance decision for those providing collateral warranties. In our article Sheena Sood and Andrew Croft provide further detail on the facts and finding of the case and their own commentary.