Agreements for lease with development obligations—collateral warranties and third party rights (typical provisions)
Agreements for lease with development obligations—collateral warranties and third party rights (typical provisions)

The following Property practice note provides comprehensive and up to date legal information covering:

  • Agreements for lease with development obligations—collateral warranties and third party rights (typical provisions)
  • Collateral warranties
  • Compliance with obligations and exercise of reasonable skill and care
  • No greater liability
  • Net contribution
  • PII
  • Limitation of liability
  • Assignment
  • Copyright
  • Step-in rights
  • More...

Collateral warranties

The typical terms of a collateral warranty provided to a tenant by a consultant, contractor or sub-contractor deal with:

  1. compliance with obligations and exercise of reasonable skill and care

  2. no greater liability

  3. net contribution

  4. professional indemnity insurance (PII)

  5. limitation of liability

  6. step-in rights

  7. assignment

  8. copyright

  9. no loss

Compliance with obligations and exercise of reasonable skill and care

The obligation is twofold:

  1. a requirement that the warrantor complies with its contractual obligations under the relevant principal agreement (ie the original appointment, contract or sub-contract), and

  2. assumption of a duty of care in favour of the beneficiary of the warranty to exercise the degree of skill and care to be expected of a reasonably competent person engaged in the particular discipline

Both of these give the beneficiary a remedy in contract rather than in tort, preferred because a claim to a tortious duty of care is not only more difficult to establish but also faces the considerable obstacle of establishing liability for what is almost certainly pure economic loss.

No greater liability

Although the warrantor assumes a duty of care to a third party, it usually limits liability by stating that there is no greater liability to the beneficiary than existed under the original appointment. This is in addition to any furth

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