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Collateral Warranties - Requirements and Pitfalls

• A collateral warranty is ancillary to another principal contract. There are
  usually two parties to a collateral warranty, the party giving the warranty (“the
  Warrantor”) and the party receiving the benefit of the warranty (“the
  Beneficiary”) (where there are step in rights, there may be a third party).
  Typically in construction, collateral warranties are provided by designers,
  contractors and specialist sub-contractors to, say, a tenant or purchaser
  acquiring an interest in the property, or a funder financing the development.
  The collateral warranty provides the Beneficiary with a direct contractual
  remedy against the Warrantor where none would otherwise be available.
  This Note summarises the key elements of a Collateral Warranty.
  
• 07.10.2008