Collateral Warranties – Key Requirements

In this article, we will be giving an overview of what collateral warranties are and an insight into the key requirements that should be considered and / or incorporated when asked to either provide a collateral warranty or when seeking the benefit of one in a construction project.

What are collateral warranties?

Collateral warranties have become an essential part of construction project documentation and are used to create a contractual link with a third party, where there otherwise would not be one. This link enables a third party to have a direct contractual relationship with a party providing construction services or works.

Parties to the collateral warranty

The parties that are typically asked to provide a collateral warranty in a construction project are usually the contractor, subcontractor and / or any design consultants.