Third party interests in construction projects
Third party interests in construction projects

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

  • Third party interests in construction projects
  • Who will be interested third parties?
  • Why are they interested?
  • Passing down obligations derived from third party agreements
  • Protecting a third party's interests

In a construction project, the contractor’s contractual relationship under the building contract is only with the employer. However, in most construction projects, there will be other third parties who will have an interest in the terms of the building contract, the way that the works are carried out and/or in the end-product. They do not ordinarily have any contractual nexus with the contractor under the building contract and therefore, if they suffer losses due to an act or omission of the contractor, cannot seek redress by claiming damages for breach of contract. Therefore, both the third parties and the employer will want to ensure that their interests in the works are protected so that, in the event that they suffer losses, they have a route of redress. This Practice Note looks at third parties who are typically interested in construction projects and how their interests are commonly protected. It looks at how an employer can seek to pass down obligations under the agreements that it has entered into with third parties (eg funding agreements, agreements for lease and planning-related agreements) under the building contract. It also looks at how third parties’ interests can be protected by way of collateral warranties, third party rights and by giving them other rights under the building contract.

This Practice Note talks primarily about the building contract and the relationship

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