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Collateral warranties—checklist

Collateral warranties—checklist This Checklist sets out the key issues to consider when drafting or reviewing a collateral warranty. For an introduction to collateral warranties generally, see Practice Note: What are collateral warranties? Requirement to provide warranties • Does the underlying building contract, consultant’s appointment or sub-contract (as appropriate) require the intended warrantor to provide the warranty (see for example: Collateral warranties clauses)? If not, the intended warrantor is not obliged to give the warranty that is being requested but, if asked, may agree to do so The beneficiaries • It is standard market practice for warranties to be provided to the following beneficiaries: ◦ funders ◦ any first purchaser of the whole or a substantial part ◦ any first tenant of the whole or a substantial part ◦ employer (if the warrantor is a novated consultant or sub-contractor) ◦ freeholder • Any other beneficiaries would be considered unusual and may be resisted by the warrantor (see table: Who gets a collateral warranty?) Consistency with underlying contract...

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Parent company guarantee—contractor checklist

Parent company guarantee—contractor checklist This checklist sets out the key issues to consider when reviewing a PCG on behalf of a contractor who is being asked to provide a PCG. The terms 'contractor' and 'employer' are used but the principles apply equally to an arrangement between a contractor and a sub-contractor or between an employer/contractor and a consultant. PCGs are often bespoke documents and the particular circumstances must be considered when reviewing a PCG. For a more detailed consideration of these issues, see Practice Note: Parent company guarantees (PCGs) in construction—drafting and negotiation issues. • Is the contractor required to give a PCG under the Building Contract? If not, there is no obligation on the contractor to provide a PCG. However, the contractor may agree to provide one to give the employer comfort and to establish/maintain a good relationship with the employer. • Does the contractor’s internal policy permit the giving of PCGs? Is approval needed? A lot of companies would rather give a PCG than a performance bond but...

Parent company guarantees (PCGs) in construction

Parent company guarantees (PCGs) in construction In the construction industry, parent company guarantees (PCGs) are commonly given to the employer by the main contractor’s holding company to guarantee the performance of the contract by the subsidiary main contractor. This is a requirement in almost every construction contract where the contractor has a parent. Most frequently, contractors are required to provide a PCG, executed by their parent, at the time of contract signing. Recourse against the parent under the guarantee will thereby be available to the employer if the contractor defaults. PCGs are found in certain other situations in construction. Occasionally, in some bespoke construction contracts, the guarantor will be a party to the contract itself, but only for the purpose of providing the guarantee. Sometimes collateral warranties are required to be given by contractors to lenders that contain PCG provisions but these are typically resisted. Also, guarantees may sometimes be given to contractors (or subcontractors) by, for example, a developer’s holding company: this is done to...

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Project lawyers’ completion documents list—onshore wind farm and ground-mounted solar projects—template

Project lawyers’ completion documents list—onshore wind farm and ground-mounted solar projects—template PROJECT DETAILS PROJECT NAME: [insert name of project] CLIENT: [insert name of client] [Insert name of firm] PROJECT LEAD: [insert name of client/lead partner] PROJECT PARTIES PROJECT PARTY DETAILS Account Bank(s) [insert name of Account Bank] (Company Registration No. [insert number]) whose registered office is at [insert registered office of Account Bank] Agent [insert name of] (Company Registration No. [insert number]) whose registered office is at [insert registered office of Agent] Architect [insert name of Architect] (Company Registration No. [insert number]) whose registered office is at [insert registered office of Architect] Arrangers [insert name of Arrangers] (Company Registration No. [insert number]) whose registered office is at [insert registered office of Arrangers] Civil Design Consultant [insert name of Civil Design Consultant] (Company Registration No. [insert number]) whose registered office is at [insert registered office of Civil Design Consultant] Construction Contractor [insert name of Construction Contractor] (Company Registration No. [insert number]) whose registered office is at...

Report on construction documentation

Report on construction documentation [insert name of property] Executive summary [insert a general summary of the construction documents/highlight any key areas of concern] Building contract and related documents Save where otherwise indicated below, the Building contract, consultant’s appointments and collateral warranties are generally in line with what we would expect to see on the market, in particular containing the following: 1) a requirement to carry out the Works/provide the Services using a standard of reasonable skill and care to be expected of a qualified professional or contractor experienced in working on projects similar to the Works; 2) an obligation not to specify or use harmful or deleterious materials when carrying out the Works; 3) an obligation to provide an irrevocable and royalty-free copyright licence for use of any and all documents and materials produced by the Contractor/Consultants during the course of the Works, with such licence also being capable of being assigned or transferred to third parties without restriction; 4) a requirement to maintain professional indemnity insurance to...

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What happens if you fail to sign a Parent Company Guarantee before completion of a contract—can signature be forced afterwards?

What happens if you fail to sign a Parent Company Guarantee before completion of a contract—can signature be forced afterwards? If a parent company guarantee (PCG) is not signed before the completion of a contract, the obligation to provide the PCG may persist. In Liberty Mercian Ltd v Cuddy Civil Engineering Ltd and another, it was determined that the obligation to provide a PCG, bond, or warranty survives termination or repudiation of the contract because these are considered collateral to the substantial stipulations of the contract and are merely procedural and ancillary. Therefore, the contractor remains under a continuing obligation to provide the PCG even after the contract has been completed or terminated. More specifically, you will need to review the terms of the principal contract to determine what it says in relation to the provision of the PCG—normally there is a requirement to provide a PCG within a specified time frame (and so there may be an ability to bring an

If you require a conditional bond from a contractor, are there privity of contract issues if the bond is entered into by the contractor's parent company rather than the contractor itself? Should the contractor be a party to the bond as well as its parent company? Is there any wording for a recital to cover this situation?

If you require a conditional bond from a contractor, are there privity of contract issues if the bond is entered into by the contractor's parent company rather than the contractor itself? Should the contractor be a party to the bond as well as its parent company? Is there any wording for a recital to cover this situation? It is not clear from the question why it is proposed that the contractor’s parent company should enter into the bond instead of, or as well as, the contractor. Whether this is an advisable course of action may depend on the particular circumstances, the demands of the guarantor/employer and financial stability of the contractor etc. However, in our experience, it is certainly not common. We envisage that the reason it is being considered may be because the parent company is going to pay for the bond, rather than the contractor. If this is the case, it does not seem essential for the parent company to be party to the bond...

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Misrepresentation, abuse of process, and whether consent required for re-assignment (MW High Tech Projects UK Ltd v Outotec (USA) Inc and Others)

Construction analysis: The dispute relates to a large energy from waste plant in Hull. A previous litigation took place in relation to this same plant between the same parties in 2021. The defendants applied to strike out or for summary judgment in respect of the claimant’s claim on the basis of abuse of process due to the previous litigation, and/or that a purported re-assignment of the benefit of the subcontract was ineffective due to lack of consent. The court held that there was no abuse of process such that the claimant’s claim in misrepresentation could proceed, however the contractual claim was struck out because the purported assignment was ineffective. This judgment serves a reminder to draft assignment provisions clearly to avoid any scope for dispute as to whether or not consent is required. Written by Carly Thorpe, partner at Walker Morris LLP (who acted for the defendants in this matter).

EU Competition law—daily round-up (16/02/2023)

A round-up of EU competition law developments, including (amongst other things) a judgment from the Court of Justice concerning a Spanish national reference seeking clarification on the quantification of damages for breach of Article 101 TEFU.