Sub-contractors and Suppliers - Scottish Construction Contracts - page 281

As mentioned in Section 13.2.1, there are no equivalent provisions in the NEC3
for the provision of collateral warranties and so, if warranties are required, this will
require to be addressed in both the main contract and sub-contract by means of
Zclauses.
11.7.2 Jus quaesitum tertio
he above statement on privity of contract is, however, qualiied where a jus quaesitum
tertio has been created by the contract. The creation of such a right will give a third
party (the ' tertius ') a right to sue under the contract, notwithstanding that it is not a
party to it. In order to create the right, the contract must expressly, or by implication,
confer a benefit on the tertius or a class of persons of which the tertius is a member.
Unless an intention on the part of the contracting parties to create a jus quaesitum
tertio in favour of a third party is expressed or can be inferred from the terms of the
contract, no such right will be created. See Scott Lithgow Ltd v. GEC Electrical Projects
Ltd (1992) and Strathford East Kilbride Ltd v. HLM Design Ltd (1997). In relation to
third party rights under the SBC, see Section 13.5.
In England, the courts, for a period, permitted companies within the same cor-
porate group to pursue losses in contract notwithstanding the fact that the losses in
question were sustained by another connected company. his approach was accepted
where the entity sustaining the loss had no direct course of action against the wrong-
doer. This was to avoid a 'legal black hole' preventing the loss being recoverable. In
the Scottish case of Clark Contracts Ltd v. he Burrell Co. (Construction Management)
Ltd (2002) the court held that the existence of the jus quaesitum tertio in favour of
another group company of the defenders did create a direct course of action, and as
such the English authorities could not be relied upon by the defenders in support of
a counterclaim for damages in respect of losses allegedly sustained by the defenders'
sister company. Lord Drummond Young, in McLaren Murdoch & Hamilton Ltd v. he
Abercromby Motor Group Ltd (2003), stated that the jus quaesitum tertio is of limited
utility. His Lordship took the view that the decision of the House of Lords in Alfred
McAlpine Construction Ltd v. Panatown Ltd (No. 1) (2001), albeit an English case, was
wholly consistent with the principles of Scots law and that Scots law should adopt the
general rule in that case as described by Lord Clyde. See also Section 12.3 for a more
detailed analysis.
11.7.3 Delict
Prior to certain case law in the late 1980s, and in particular, D&FEstatesLtd v.
Church Commissioners for England (1989) and Murphy v. Brentwood DC (1991),
it had been understood that an employer could sue a sub-contractor direct under
delict and recover economic loss, see Junior Books Ltd v. The Veitchi Co. Ltd (1982).
Collateral warranties emerged as a result of D&FEstatesLtd and Murphy .(See
also Section 13.2.) Market forces dictated that any perceived vacuum in the law of
negligence be filled by the law of contract. Developers, owners and funders of large