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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.
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What is a collateral warranty?
On a construction or engineering project, a collateral warranty is a contract under which a professional consultant (such as an architect), a building contractor or a sub-contractor warrants to a third party (such as a funder) that it has complied with its professional appointment, building contract or sub-contract. (See Practice note, Collateral warranties on construction projects. However, some (weaker) forms of collateral warranty only refer to a “duty of care” or selected obligations under the professional appointment, building contract or sub-contract. A third party right is the right of a person who is not a party to a contract (a third party) to enforce the benefit of a term of that contract. For example, that could include a right for a funder to enforce a term of:
Why are collateral warranties and third party rights needed?
A construction or engineering project needs collateral warranties or third party rights for three main reasons:
Understand the situation circumstances and problem at hand
Efforts, energies and resources in developing evidence-based and comprehensive application
We always remain in regular contact with the client to inform them about the progress
On request, we can provide legal assistance in the court if there is a hearing or any requirements
ListeningUnderstand the situation circumstances and problem at hand
DevelopmentEfforts, energies and resources in developing evidence-based and comprehensive application
ProgressionWe always remain in regular contact with the client to inform them about the progress
AssistanceOn request, we can provide legal assistance in the court if there is a hearing or any requirements
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