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Alfred McAlpine Construction Ltd v Panatown Ltd [2001] 1 AC 518

Contract - Building - Damages - Duty of Care deed - Defects and delays

Facts:

Alfred McAlpine Construction (AMC) were builders contracted to complete work on an office block and car park owned by company that was part of a group of companies which included an Panatown. Delays and defects in AMC’s performance of the contract caused loss to one of the companies. AMC had also entered into a duty of care deed with the owner of the site which stipulated that where a lack of reasonable skill and care was found to have been shown by AMC, a remedy was available to the owner at a nominal amount. The deed was assignable to any successor in title. Panatown was a successor. When defects were found, Panatown sought damages against AMC for the delay and the defects (having already received a damages under the duty of care deed). AMC appealed.

Issues:

Whether the employer, who was not initially party to the contract, was entitled to damages for breach of contract by AMC.

Held:

The appeal by AMC was allowed. It was held that since the employer was not party to the original contract, they had no grounds to seek damages for delay and defects, especially where the terms of the duty of care deed had already been exercised. The employer had suffered no financial loss so could not claim more than the nominal damages that were already determined by the duty of care deed. The case of Dunlop v Lambert (1839) 6 Cl & F 600, HL(Sc) was distinguished as AMC had signed a contractual duty of care for liability which readily applied to a third party, namely Panatown, if AMC failed to perform their main contractual obligations. Dunlop would only apply in there had been no duty of care deed assignable to Panatown.


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