Collateral Warranties In Construction Projects: Why You Need Them

INTRODUCTION

Construction projects are crucial to societal development. They form the hallmark of infrastructural growth. These construction projects involve the expertise of professionals from various disciplines to ensure that the project moves from a mere paper design to a lasting structure, and this requires the execution of several construction contracts. Typically, under construction contracts, persons who are not privy to a contract cannot enforce a contractual right nor impose an obligation under that contract. However, the existence of collateral warranties in construction projects bridges the gap and allows persons who ordinarily would not have had a right to enforce a construction contract or seek compensation under a construction contract to do so. Simply put, collateral warranties in construction projects are agreements that grant third-party stakeholders a right to enforce construction contracts to which they were never a party. For example, a