What is a collateral warranty UK?
Collateral warranties are agreements which are associated with another ‘primary’ contract. They provide for a duty of care to be extended by one of the contracting parties to a third party who is not party to the original contract.
What is collateral construction?
It is an agreement under which a professional consultant, building contractor or sub-contractor generally warrants to a third party that it has complied with its appointment, building contract or sub-contract.
What does warranty mean in construction?
In a typical construction contract warranty provision, the contractor warrants, represents or covenants, that its work will be performed in accordance with certain standards stated in the contract (e.g., in “a good and workmanlike manner”) and otherwise be free of defects and in conformity with the design documents.
What is included in a collateral warranty?
A collateral warranty is a contract under which a party involved in the works warrants to a third party beneficiary that it has fulfilled its obligations under its underlying building contract, subcontract or professional appointment (referred to as underlying contract in this article).
Are collateral warranties enforceable?
Once the building contract has been entered into, the building contractor may not be keen to extend its contractual obligations to more people and any obligation to provide a collateral warranty in a form to be agreed is unlikely to be enforceable.
What is collateral warranty in construction industry?
What is difference between warranty and guarantee in construction?
Most warranties have time limits and other restrictions (limited warranty). A guarantee is a more general term, referring to any promise by a manufacturer or contractor that a product or service will be free from defects.
What do collateral warranties cover?
What should I look for in a collateral warranty?
The service provider should check that the limitation period and start date in the collateral warranty mirrors that of the primary contract to ensure that it is not exposed to potential claims beyond the limitation period in the primary contract.
Who benefits from a collateral warranty?
A collateral warranty is an additional contract between, commonly, a (1) contractor, consultant or subcontractor (warrantor) and (2) an interested third party (beneficiary) giving that third party the right to sue the warrantor.
When would you use collateral warranty?
Collateral warranties are used to bridge the contractual gap and create a direct contractual link for the benefit of those parties that may otherwise have no recourse.
Can I amend my JCT collateral warranty form?
We regret JCT cannot advise on amending its forms, and it cannot recommend any particular forms of collateral warranty for consultants. Click on one of the range of JCT Collateral Warranties to view in more detail:
What is a contractor collateral warranty for a funder?
JCT’s Contractor Collateral Warranty for a Funder is designed for use where a warranty is to be given by the contractor to a separate funder who has entered an agreement with the employer to provide finance for the works.
What are collateral warranties and how are they used?
Collateral warranties are used as a supporting document to a primary contract where an agreement needs to be put in place with a third party outside of the primary contract. Sometimes an architect, contractor, or sub-contractor will need to warrant to a funder, tenant or purchaser that it has fulfilled its duties under a building contract.
