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Collateral Warranty

A Contract between the Designing Sub-Contractor and Employer or another Beneficiary.

To sue to recover damages for losses suffered, the completed buildings owners, tenants or financiers may want a Collateral Warranty, so they can sue under contract. The obligations, risks and potential costs should be made clear to the (sub) contractor before he prices the works, so he can price the extra liabilities being asked of him.

Why are Collateral Warranties used?

A third party has to rely on the tort of negligence, to sue to recover losses he may suffer as a result of deficient design and/or installation works. To widen the potential for loss recovery and to create a link by which the legal process of recovery can easily be pursued, employers, tenants and financiers often insist that the providers of key building works, provide a collateral warranty. This is especially prevalent where the design has been subcontracted to the constructor.

A Collateral Warranty is a Contract

The ECA welcomes the opportunity to comment on the Warranty provisions that Members encounter.

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ECA Making Payment Practices Publicly Available


A summary document explaining the Reporting of Payment Practices and Reporting Regulations 2017.

Published 31 Oct 2023

ECA Guidance on Collateral Warranty


Guidance which introduces and explains what a Collateral Warranty means.

Published 30 Mar 2017 Last reviewed 30 Mar 2017

Late Payment of Commercial Debt Regulations


A joint publication with the BESA (Building Engineering Services Association) explains the Late Payment of Commercial Debt Regulations

Published 30 Mar 2017 Last reviewed 30 Mar 2017