Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

PCG definition

What does PCG mean? PCG stands for parent company guarantee: a contractual promise by a parent company to answer for, and often to ensure, a subsidiary’s performance and payment obligations under another contract. It is a descriptive market term, not a defined statutory concept; its legal effect depends on the wording of the guarantee/indemnity. PCGs are common performance security in construction and engineering contracts, development agreements, outsourcing and supply contracts, and commercial leases, mitigating insolvency and performance risk. Key features typically negotiated include: scope (performance and/or payment), whether liability is co-extensive with the subsidiary’s obligations, inclusion of an indemnity (to reduce suretyship defences),...

Construction Law ‘P’ Glossary: Practical completion, pay less/payment notices, partnering, procurement, principal designer/contractor, PFI/PF2

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Practice notes

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Parent company guarantee (PCG)

A PCG is an agreement between a parent company and a Beneficiary under which the parent promises the Subsidiary’s performance owed to that beneficiary beneath a separate contract between them (for example, a building contract). If the subsidiary fails to fulfil its obligations to the beneficiary, the parent company can be obliged either to perform those obligations itself or to repay the beneficiary for losses arising from the subsidiary’s failure to perform. See subtopic: Parent company guarantees in construction projects.

Partial possession

Partial possession arises when the employer takes control of one or more parts of the works before the whole project reaches practical completion; for instance, letting a completed storey to a tenant while work continues on the remaining floors. In that situation, practical completion is treated as achieved for the relevant part. See Practice Note: Early use and partial possession (Partial possession) as above...

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Web page updated on 21/05/2026

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