It is an agreement under which a professional consultant, building contractor or sub-contractor generally warrants to a third party that it has complied with its appointment, building contract or sub-contract. ...

When would you use a collateral warranty?

Collateral warranties are used as a supporting document to a primary contract where an agreement needs to be put in place with a third party outside of the primary contract. ... It can also provide the third-party contractual rights enabling it to claim for losses which would not otherwise be recoverable.

Are collateral warranties required?

Are parties required to provide collateral warranties? This is dependent on the terms of the underlying contract. Providing a collateral warranty increases the potential scope of a provider's liability, so careful thought should be given to the decision to do so.