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Construction Law Reporter


Construction of contract – Whether contract one of guarantee or indemnity

The claimant brought an action for summary judgment for £4m against the defendant, Mr Dunne. The claim arose out of two contracts entered into between the claimant, Mr Dunne personally and two of his companies, Dunne Building and Civil Engineering Ltd ('DBCE') and its parent company Dunne Group Ltd ('DGL'). The claimant's case was that the parties had entered into a contract of indemnity under which Mr Dunne was personally liable to pay it the sum of £4m. Mr Dunne denied that he was liable to pay and submitted that the contract between the parties was one of guarantee that only imposed secondary obligations upon him, with the primary obligations resting with DBCE. Fraser J held that the liability of Mr Dunne was as a primary obligor and that he was therefore liable to make the payment of £4m to the claimant.

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