What is a collateral warranty UK?
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).
What is a collateral warranty Australia?
A collateral warranty is essentially an agreement that exists alongside, but separate from, another principal agreement. It may be made between the parties to the principal agreement only or it may involve third persons who are not parties to the principal agreement.
What is a collateral warranty Scotland?
A collateral warranty is a contract that creates contractual rights between two parties that would not otherwise exist. It is collateral to a principal contract and therefore the terms of the principal contract can be as important as the collateral warranty itself.
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.
How do I get a collateral warranty?
Who gets collateral warranties or third party rights? While specific requirements vary from project to project, an employer typically asks its professional consultants and the contractor to agree to provide collateral warranties or third party rights to: Any funder. Any buyer (often referred to as a purchaser).
How long does a collateral warranty last?
12 years
This is generally for a period of 12 years. You’ll need cover up to the value of the Collateral Warranty.
WHO issues 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.
What is a collateral deed?
In a construction context, a deed of collateral warranty is a deed signed by a subcontractor that contains warranties and other obligations in favour of the ultimate principal on the project.
When would you use a collateral warranty?
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.
What does a collateral warranty do?
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.
How long do collateral warranties last?
Ordinarily a party to a deed (collateral warranties are usually executed as deeds) has 12 years from the date of a cause of action arising to bring a contractual claim before that claim becomes statute barred by limitation.
Who should provide collateral warranties?
While specific requirements vary from project to project, an employer typically asks its professional consultants and the contractor to agree to provide collateral warranties or third party rights to: Any funder. Any buyer (often referred to as a purchaser). Any tenant (or a given number or class of tenants).