Standard form of agreement for use where a collateral warranty is to be given by a consultant to a funder of a commercial, industrial or housing development
Pack of 5 with guidance notes
ISBN 1 898671 32 x
This form is for use where a collateral warranty ('warranty') is to be given by a consultant to a funder of a commercial or industrial development. A consultant is only under a legal obligation to give a warranty if it agreed to do so in its contract with its Client. By the warranty. the Consultant enters into a contract with the Funder. In clause 1, the Consultant warrants to the Funder that it has exercised and will continue to exercise reasonable skill care and diligence in the performance of its services to the Client under the Appointment. Thus, the Funder can sue the Consultant in contract if the Consultant is in breach of the warranty. It is therefore important that the extent of those services and the terms under which they are performed are clearly set out in a written appointment document. By clause 2 (a), the Consultant's liability is limited to its 'net contribution': that is, the Consultant should only be liable for its share of the Funder's loss, after deducting the amount which it would be just and equitable for other consultants and advisers, contractors and subcontractors to pay, having regard to their share of responsibility for the loss. By clauses 6, 7 and 8, the Funder is also given 'step-in rights', that is rights to step into the position of the Client under the Appointment in the circumstances set out.