Collateral Warranty Collection (B145)

What does this Collateral Warranty Collection contain?

Three separate documents for the price of two. This download contains three forms of collateral warranty agreement – from a contractor, a consultant and a subcontractor.

These are separately available as Document numbers B142, B143 and B144 – at £30 each.

Here you can have all three for just £60.

This collection contains:

(1) Contractor Collateral Warranty Agreement 
For use where a contractor enters into a direct agreement with a purchaser, tenant or funder of a development.

(2) Consultant Collateral Warranty Agreement 
For use where a consultant (architect, structural engineer, quantity surveyor etc.) enters into a direct agreement with a purchaser, tenant or funder of a development.

(3) Subcontractor Collateral Warranty Agreement
For use where a subcontractor enters into a direct agreement with a developer or with a purchaser, tenant or funder of a development.

What are collateral warranty agreements for?

A Collateral Warranty is an agreement between a consultant or contractor involved in the design and/or construction of a development and a third party, the beneficiary, who acquires an interest in that development. The beneficiary may be a purchaser or tenant or a bank providing the finance for the development. And where the developer has a collateral warranty agreement with a subcontractor, the developer is a beneficiary.

Under  English law, a contractor or consultant on a construction project  will be liable to its client for defective design or work due to its negligence, whether this is specified in the contract or not.  This liability will normally last for at least 6 years from the time the work was completed.

However,  purchasers and tenants of the building who suffer loss because of a defect that appears after the work is completed will not be able to recover loss form  the contractor or consultant.  So, to overcome this problem,   a collateral agreement is signed between the consultant or contractor and the end-user.  The beneficiary can sue for breach of contract under the collateral agreement.

What detailed terms are there in these collateral warranty agreements?

Each document contains 9 clauses covering

• definitions
• warranty
• deleterious materials
• copyright
• indemnity insurance
• assignment & third party rights
• notices
• law & jurisdiction
• step-in rights

The contracts are accompanied by Explanatory Notes that explain the background and purpose of collateral warranties as well as dealing with individual clauses in the document.

Contract Author: Giles Dixon, construction solicitor