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Legal Updates

JCT launch 2016 collateral warranty documents

10 January 2017 #Construction


In addition to the release of the new 2016 suite of contracts, the Joint Contracts Tribunal (JCT) has published 2016 collateral warranty documents.

The collateral warranty documents available include:

  • Contractor Collateral Warranty for a Funder;
  • Contractor Collateral Warranty for a Purchaser or Tenant;
  • Sub-Contractor Collateral Warranty for a Funder;
  • Sub-Contractor Collateral Warranty for a Purchaser or Tenant; and
  • Sub-Contractor Collateral Warranty for the Employer.

What are the key changes?

Contractor Collateral Warranty for a Funder

The Contractor Collateral Warranty for a Funder has minor amendments to the wording in clauses:

  • net contribution clause (clause 1.1);
  • warranty in respect of materials in the Works (clause 2);
  • copyright licence (clause 8); and
  • professional indemnity insurance (clause 9).

One consequence of those changes is a commensurate reduction in the information required in the Warranty Particulars.

Contractor Collateral Warranty for a Purchaser or Tenant

Similarly the minor changes in the Contractor Collateral Warranty for a Purchaser or Tenant relate to:

  • the net contribution clause (clause 1.3);
  • the warranty in respect of materials in the Works (clause 2);
  • the copyright licence (clause 4); and
  • professional indemnity insurance (clause 5).

Again, one consequence of those changes is a commensurate reduction in the information required in the Warranty Particulars.

What to consider when using the collateral warranty documents 

When using the Contractor / Sub-Contractor collateral warranty documents users should:

  • complete all sections of the collateral warranty and Warranty Particulars accurately;
  • complete the Rights Particulars of the underlying building contract / sub-contract accurately to enable the developer to call for a collateral warranty in favour of a funder, purchaser and/or tenant; and
  • ensure consistency with the underlying building contract / sub-contract.

Additional clauses may be required in the collateral documents to:

  • allow the beneficiary to bring other claims against the Contractor / Sub-Contractor e.g. a claim against the Contractor / Sub-Contractor in tort as a result of the Contractor’s / Sub-Contractor’s breach of statutory duty; and
  • require a parent company guarantee from the Contractor’s / Sub-Contractor’s parent company.

For more information on collateral warranties in general, or collateral warranties from a Contractor’s / Sub-Contractor perspective or a beneficiaries perspective please contact David Rintoul or a member of the Construction Team.

 

Clarkslegal, specialist Construction lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Construction matter please contact Clarkslegal's construction team by email at constructionsector@clarkslegal.com by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.

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Victoria  Kempthorne

Victoria Kempthorne
Senior Solicitor

E: vkempthorne@clarkslegal.com
T: 0207 539 8062
M: 0791 783 1789

Contact

Construction team
+44 (0)118 958 5321