Collateral warranty 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...

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? ...

At first glance, a Scots law building contract, professional appointment or collateral warranty will seem much like its English law counterpart to any experienced practitioner. Look more closely, though, and you will find a range of subtle but significant distinctions that merit attention. This Checklist sets out practical pointers for converting an English law construction contract into one that complies with Scots law (often referred to as ‘kilting’ a contract). It is not comprehensive and proceeds on the basis that the parties are using standard mid-market construction forms without extensive project-specific drafting. Where such bespoke drafting is included, further divergences between Scots and English law may need to be considered. Execution issues There is no concept of ‘execution as a deed’ under Scots law. Scots law documents are ordinarily signed in ‘self-proving’ form pursuant to the Requirements of Writing (Scotland) Act 1995. They are not front-dated; instead, each party inserts its own signing date within its respective execution block...

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...

What was the background? Baltimore Wharf SLP (Baltimore/the claimant) commenced proceedings against Ballymore Properties Ltd (Ballymore/the defendant) and WSP UK Ltd (the Part 20 defendant) following the collapse of a nursery roof at Baltimore Wharf, London, on 15 July 2023. The claims, advanced both under a collateral warranty dated 7 January 2013 and in tort, contend that the roof failed because the connection between the nursery roof steel beams and the RC frame gave way, with losses put at in excess of £2 million. Proceedings were issued on 31 May 2024; the defendant served its defence on 17 July 2024 and, the same day, issued a Part 20 claim against WSP. After the action began, the TCC sealed a Consent Order on 1 August 2024 staying the claim until 1 October 2024 to facilitate settlement discussions. Negotiations then moved forward, with settlement proposals made by both WSP and Ballymore. On 29 August 2024, Ballymore’s solicitors circulated a draft settlement agreement to Baltimore under which Ballymore would pay...

That urgency is visible both in evolving best practice—like adding AI clauses to terms of reference and procedural orders—as well as in the first tranche of objections claiming improper dependence on AI. A 9 December 2025 ruling by the US District Court for the Southern District of California, Lapaglia v Valve, 3:25-cv-00833, shows how even untested assertions that an arbitrator ‘ghostwrote’ an award with AI can bleed into collateral litigation, trigger due process worries, and pose reputational exposure. It is an early warning that clearly underscores the pressing need for explicit AI protocols, human‑in‑the‑loop safeguards, and transparent disclosures aligned with party expectations and applicable law. This article summarises Lapaglia v Valve and distils practical guidance from earlier, closely analogous practice on tribunal delegation and nascent generative AI recommendations, setting out a clear, forward‑looking framework for what tribunals and counsel should appropriately embed in their arbitration engagement rules now to reduce the risk of AI‑based challenges later. Lapaglia v Valve Lapaglia concerned a consumer arbitration administered by the American...

Abbey Healthcare (Mill Hill) Ltd v Augusta 2008 LLP (formerly Simply Construct (UK) LLP) [2024] UKSC 23 What are the practical implications of this case? The court considered whether a contractor’s collateral warranty qualifies as a ‘construction contract’ under HGCRA 1996, s 104, thereby conferring a statutory right to adjudicate under HGCRA 1996, s 108. That status depended on whether the warranty was a contract ‘for... the carrying out of construction operations’ within HGCRA 1996, s 104(1)(a). The decision confirms that: a collateral warranty will only be a construction contract under HGCRA 1996, s 104(1)(a) where the contractor undertakes to the beneficiary an obligation to perform construction operations that is separate or distinct from its obligation to do so under the related building contract (or other appointment) a collateral warranty that simply warrants the contractor’s performance of its obligations to the employer under the building contract is not a contract for the carrying out of construction operations...

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?...

This Practice Note examines whether a receiver may undertake building works and, in particular, whether the receiver can finish a development left incomplete at the date of appointment. It identifies a range of points the receiver should evaluate before moving ahead with any works and deciding whether to proceed. For ease when considering these issues, and to streamline the discussion, it is assumed that: the developer is a corporate mortgagor of the property; and the mortgagor procures works in the usual way by appointing a building contractor and a professional team of architect, engineers, quantity surveyors and others (collectively, the Professional Team) References to the mortgagor include, where appropriate, the mortgagor acting through the receiver. A receiver in this context means a fixed charge receiver or a Law of Property Act receiver. Receiver’s powers to carry out building works Before a sale is completed, a receiver’s statutory powers under the Law of Property Act 1925 (LPA 1925) are confined to...

Court of Appeal—professional negligence ARCHIVED : This Practice Note has been archived and is not maintained. The Court of Appeal upheld an appeal in a claim against solicitors, holding that the loss of a chance head of damage was too remote. At first instance, the judge concluded that Lewis Silkin LLP had fallen below the required standard by not advising their client to include a jurisdiction provision in his employment agreement with a franchisee involved in the Indian Premier League’s Twenty20 competition. Because no jurisdiction clause appeared in the contract, when the client later issued proceedings against the franchisee over a severance entitlement, he faced jurisdictional challenges (ultimately dismissed) brought by the franchisee, which postponed his obtaining judgment for £10 million in severance. The client’s case was that, with proper advice on jurisdiction, the contract would have contained an exclusive jurisdiction clause. On that footing, he said, he would have secured judgment for the severance sum sooner (as there would have been no hold‑ups arising from jurisdiction objections) and...

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...

Letter for sub-contractor to send to employer in the event of main contractor insolvency [ [ Sub-contractor’s headed notepaper ] OR [ Sub-contractor’s address ] ] [ contact name, job title and department ] [ name of employer company ] [ address ] Dear [ contact name ] [ name of project ]—[ name of main contractor ]—Insolvency We believe that [ name of main contractor ] [ has entered into administration OR is in liquidation OR has commenced a moratorium OR other ] ....

1 Sub-Contractor warranties and undertakings The Sub-Contractor warrants and undertakes that it has complied with, and will continue to comply with, all terms and obligations required of it under the Sub-Contract; to the extent it undertakes any design for the Sub-Contract Works, it has exercised, and will continue to exercise, the reasonable skill, care and diligence expected of a properly qualified and competent architect or other suitable professional designer experienced on projects of equivalent scope, type, size, nature and complexity to the Works. The Sub-Contractor’s obligations under this Memorandum are neither wider nor longer in duration than those owed to the Contractor under the Sub-Contract; in any action it may rely upon any limitation and equivalent defences available thereunder as if the Beneficiary were a joint employer with the Contractor, save that it may not exercise any right of set-off or counterclaim. The Sub-Contractor’s obligations under or by virtue of paragraph 1 shall not...