Collateral warranties and third party rights explained

Abstract

Employers on construction projects commonly need to consider the rights of other interested parties, such as a future purchaser (if they are going to sell the property), a future tenant (if the property will be let when completed) or if they require funding from a bank/financial institution to complete the project. This paper explains the two most common methods of ensuring that these parties also have rights (if needed) to bring claims against the parties involved in the construction project, and the key practical differences between using collateral warranties or granting third party rights and their advantages and disadvantages.