Collateral meaning

This Checklist offers a proposed set of key points to weigh up when assessing whether a construction agreement—be that a building contract, a consultant appointment or a collateral warranty—can be assigned. It also sets out the practical steps to be taken to complete an assignment of the benefit of a construction contract from one party to another. Does the construction contract contain assignment provisions? Construction agreements commonly include an explicit clause addressing the parties’ rights to assign under it. Where the contract says nothing about assignment, either side may assign the contract without limitation or constraint. In some cases, the contract will expressly bar assignment by one or both parties. Usually, the employer is not wholly barred from assigning; however, there is often a cap on how many assignments can occur without the other party’s consent (see further on restrictions below). See Practice Note: Assignment in construction contracts. Are there any restrictions on the right to assign? Construction...

This Checklist outlines the principal contractual points within a bundle of construction documents that a construction lawyer should review and report on for a prospective buyer of a property or development. It should be read alongside: Construction due diligence for property purchase-initial review of construction package-checklist. After reviewing the documents and raising enquiries, the purchaser’s construction lawyer will also need to produce a report on the construction documents, see Precedent: Report on construction documentation. The issues below proceed on the basis that construction at the relevant property has been completed. Accordingly, there is no need to scrutinise terms governing the running of the contract during the build, such as payment provisions; these are only relevant where a buyer is acquiring while works are ongoing and step-in rights are being offered. Building contracts Identity of contractor – Confirm the contractor continues to exist and carry out a financial check (for example via Dun & Bradstreet) to ensure it is financially sound. Date of contract –...

When drafting or negotiating third party rights provisions in a construction contract (see Practice Note: The Contracts (Rights of Third Parties) Act 1999 in construction contracts), the following should be taken into account: Is the Contracts (Rights of Third Parties) Act 1999 generally excluded? Does the agreement clearly exclude the conferral of rights or benefits on third parties under the Contracts (Rights of Third Parties) Act 1999 (C(RTP)A 1999)? Many contracts adopt a general exclusion of C(RTP)A 1999, but in construction arrangements this is usually qualified by any clause that grants specific third parties rights—see, for instance, Precedent: Third Party Rights Act clause. Where a general exclusion appears, ensure the clause granting rights to third parties is expressly carved out. Third party rights or collateral warranty? If the contract states that third party beneficiaries will receive particular benefits, or may enforce the agreement, does it specify whether such rights/benefits are provided pursuant to C(RTP)A 1999 or delivered by a collateral warranty? ...

The defined terms in the flowchart shall have the following meaning: Appointed Representative Regulations — the Financial Services and Markets Act 2000 (Appointed Representatives) Regulations 2001, SI 2001/1217 Business Order — the Financial Services and Markets Act 2000 (Carrying on Regulated Activities by Way of Business) Order 2001, SI 2001/1177 Exemption Order — the Financial Services and Markets Act 2000 (Exemption) Order 2001, SI 2001/1201 Non-Exempt Activities Order — the Financial Services and Markets Act 2000 (Professions) (Non-Exempt Activities) Order 2001, SI 2001/1227 PRA-regulated activities — denotes regulated activities designated as PRA‑regulated activities under the Financial Services and Markets Act 2000 (PRA‑regulated Activities) Order 2013, SI 2013/556 RAO — the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, SI 2001/544 UCITS qualifier — carries the meaning attributed to it in the Glossary of the Financial Conduct Authority (FCA) Handbook To determine whether an activity is regulated, follow the flowchart below. Click below to view or print...

This flowchart illustrates a possible step-in rights procedure that might appear within a collateral warranty. The specific terms of any step-in rights set out in the relevant collateral warranty should always be reviewed before seeking to exercise such rights in practice. To view or download in PDF format, please click the link below...

UK Care No 1 Ltd v HMRC [2026] UKUT 90 (TCC) The appellant, UKC1, was a Guernsey-incorporated company. It served as the issuer of loan notes within a securitisation structure for the BUPA group. Those notes were placed at a discount and incurred transaction expenses. UKC1 recognised the obligation on an amortised cost basis. That accounting treatment reflected the discounted issue price and the associated fees borne at issue time. (CTA 2009, s 327 is inapplicable where fair value accounting is adopted.) In 2016—when BUPA intended to dispose of certain care homes included in the collateral package—BUPA acquired UKC1 and it became resident for UK tax. UKC1 subsequently bought back the loan notes. The terms for early repayment were set by a ‘Spens’ (or ‘make whole’) provision, which required payment of whichever was greater: the principal sum, or the present value of future cash flows, discounted by reference to a named gilt...

Financial services developments ESMA consults on CCP collateral and investment policy standards following EMIR 3 review The European Securities and Markets Authority (ESMA) has initiated a public consultation on draft regulatory technical standards (RTS) to amend Commission Delegated Regulation 153/2013, following the European Market Infrastructure Regulation (EMIR 3) review. The call for input invites feedback on: conditions for central counterparties (CCPs) to accept public guarantees, public bank guarantees and commercial bank guarantees as collateral; criteria under which debt instruments qualify as eligible financial instruments within CCP investment policy; highly secured arrangements for emission allowances lodged as margins or default fund contributions. EMIR 3 makes permanent a broader range of guarantees eligible as collateral and extends scope to clients of CCPs that are non-financial counterparties. The consultation closes on 30 April 2026, with ESMA submitting final draft RTS to European Commission by end-2026...

What are the practical implications of this case? This notable judgment addresses three discrete themes of particular significance. First, it revisits the Harman undertaking, which prohibits collateral use of documents obtained on disclosure in civil litigation. Deploying materials produced on disclosure in Australian proceedings to support an anti-suit injunction in England constitutes a breach of that obligation. Second, it assesses the duty of full and frank disclosure on without notice and short notice applications, together with the limited circumstances in which the court may properly exercise its discretion not to set aside an order procured in breach of that duty of full and frank disclosure. Finally, the decision offers a considered treatment of the doctrines of actual and ostensible authority, in a scenario where a company seeks to place reliance on engagement letters executed by a separate entity within the same corporate group. What was the background? Greensill Bank AG (GBAG) is a bank incorporated in Germany and forms part of the Greensill Group. It...

This Practice Note looks at Term Loan B (TLB) facilities, which often feature as a senior tranche within syndicated loans in leveraged financings. TLBs are long-established in the US market and are increasingly seen in the European lending market for institutional investors. It examines the structure of a typical TLB and how it diverges from traditional European leveraged loans, before setting out the key features. This Practice Note assumes some understanding of leveraged finance. For introductory information, see: Introductory guide to acquisition finance. For explanations of common terms, see Practice Note: Glossary of acquisition finance terms and jargon. What is a Term Loan B? In lending markets, ‘Term Loan B’ or ‘TLB’ (short for Term Loan Bullet) describes a tranche of senior secured credit facilities made available to a borrower and intended to be syndicated in the institutional loan market. They are usually floating-rate term facilities with an actual or implied non-investment grade rating, a five to seven year maturity and either nominal amortisation of 1% per annum...

Heads of terms A business purchase (the target business) typically starts with settling the key commercial points—price, structure of the deal, due diligence steps, exclusivity provisions and timetable. These points are commonly negotiated by the parties themselves, or alongside their accountants and other professional advisers, and then set out in heads of terms, sometimes called a ‘letter of intent’ or ‘memorandum of understanding’. See Practice Note: Heads of terms—share and asset purchases. Where environmental risks are known or suspected, the heads of terms might cover: providing the buyer with any existing environmental report(s) a requirement for a reliance agreement or collateral warranty, giving the buyer the benefit of those report(s) a process allowing the buyer to undertake a phase 1 environmental audit or phase 2 ground investigations headline terms for an environmental indemnity or environmental insurance What happens during the preliminary phase?...

An intention to create legal relations is required A court may conclude that an agreement is not enforceable even where consideration is present, because the parties lacked any intention to be legally bound (see, eg, Blue v Ashley). Did the parties intend to create legal relations—a question of fact Whether the parties possessed the necessary contractual intention is a factual matter, determined by the particular facts of the case. That said, the authorities accept that, in certain contexts, there is a presumption that such intention is missing. Proving the intention to create legal relations—express agreements In a typical commercial setting, it is generally unnecessary to prove that the parties to an express arrangement actually intended to create legal relations. In the absence of contrary evidence, the law presumes that they did. The burden of establishing that no legal effect was intended falls on the party asserting that position, and that burden is a heavy one (Edwards v Skyways, Kingswood v Anderson and Barbudev v Eurocom...

The Contract comprises the completed Standard Building Contract Without Quantities for use in Scotland 2016 published by the SBCC subject to the following amendments: Recitals and Articles updated: contractor to provide a master programme and Schedule of Information Requirements; CDP responsibility accepted; Principal Contractor duties priced; arbitration deleted; Schedule of Amendments prevails; Third Party Agreements duties. Contract Particulars: arbitration entries removed; Rectification Period set at 12 months; fluctuations and certain PII/guarantee entries deleted. Conditions: key definitions revised (Practical Completion, Copyright Material, Design sub‑contractors, Funder, Site); Scottish jurisdiction; approvals mean principles only; entire agreement; variations in writing. Design/materials/programming: contractor accepts ER/CP; quality and non‑deleterious materials; programme reporting; site risk; drawings/info supply; tighter discrepancy notices. Time/defects: mitigate and advise on delay; narrower Relevant Events; Practical Completion clarified; stronger rectification, consequential damage and indemnity; phased as‑built/occupation information. IP/confidentiality/BIM: broader licence, moral rights waivers and delivery; confidentiality reinforced; BIM where adopted. Management/sub‑contracting: access, approved Site Manager, meetings; prescribed sub‑contracts; collateral warranties/third‑party rights; CDM duties; insurance...

The Contract comprises the completed Standard Building Contract With Approximate Quantities 2016 published by the JCT subject to the following amendments: This Contract adopts JCT SBC/AQ 2016 with extensive modifications to reflect design responsibility, building safety and commercial controls. Recitals: Contractor to provide a master programme and Schedule of Information Requirements; confirms site due diligence and accepts full CDP design liability. Articles: Dutyholder Regulations added; Tender Price covers Principal Contractor duties; arbitration removed; Schedule of Amendments prevails; strict protection of Third Party Agreements. Definitions/governance: new and revised terms (Building Safety Regulator, HRB, Practical Completion, Copyright Material, Design Sub‑contractors, Dutyholder Regulations); several deletions; English court jurisdiction. Design/materials/information: skill‑and‑care design and coordination; only new, compliant, non‑deleterious materials; golden thread storage; monthly programme reporting; site risks at Contractor’s risk. Procedures/controls: tighter instruction, testing, defects and as‑built duties; enhanced confidentiality and IP licences; HRB assistance; CDM/Dutyholder competency confirmations. Sub‑contracting/rights: prescribed sub‑contracts, insurances and delivery of collateral warranties/third‑party rights; limits on assignment. Payment/commercial: 28‑day final...

This Deed is entered into on the [ insert date ] day of [ insert month ] 20[ insert year ] Parties [ insert name ] (Company Number [ insert number ]) whose registered office is at [ insert address ] (the ‘Contractor’); [ and ] [ insert name ] (Company Number [ insert number ]) whose registered office is at [ insert address ] (the ‘Beneficiary’, which expression shall include successors in title and any permitted assignee) [ ; and OR . ] [ [ insert name ] (Company Number [ insert number ]) whose registered office is at [ insert address ] (the ‘Employer’). ] WHEREAS (A) [ [ insert name ] (Company Number [ insert number ]) whose registered office is at [ insert address ] (the ‘Employer’) OR The Employer ] has entered into a building contract dated [ insert date ] with the Contractor (the ‘Building Contract’) for the [ design and ] construction of...