A recent decision of the Technology and Construction Court highlights the importance of carefully planning procurement structures, and providing for interested third parties to be given direct contractual rights against construction parties, as the transferred loss principle is unlikely to be available to plug any black holes arising in connection with construction contracts that include clauses concerning the disapplication of third-party rights.

The Stepping Stone Group Ltd (SSGL) contracted Dr Jones Yeovil Ltd (DRJ) to build and refurbish some assisted living units. The work was procured under three separate contracts on amended JCT Design and Build 2005 and JCT Minor Works 2011 terms. The property was owned by NCL, a subsidiary of SSGL. After completion, NCL disposed of the units on long leases.

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