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NEC ECC: Collateral warranty

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The contract was executed and a z clause was included which required the Contractor to provide collateral warranties. However, they never provided the collateral Warranty but has provided a Parent company Guarantee instead. I was off work and I have only just picked this up and the client is not aware of it. What remedy do I have?
asked Feb 19, 2019 in Z clauses by Zed (460 points)  

1 Answer

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These are quite different and serve different purposes.

A Parent Company Guarantee (PCG) is used in relation to performance under the contract, as provided by secondary option X4, and is where the parent or holding company indemnifies, that is protect from the consequences, the Employer (Client) of the Contractor not performing as obligated under the contract.

A Collateral Warranty is where you provide assurance to a third party, or beneficiary, that specific facts or conditions are true, usually that the constructed building will meet certain performance requirements.  As an alternative to a collateral warranty, a 3rd party agreement, such as Y(UK)3 under NEC, may be used which essentially does the same thing.

Note that the PCG will name the parties but a collateral warranty may identify the beneficiary by type, or class, such as; future building tenant or occupier.
answered Feb 19, 2019 by Andrew W-I Panel Member (27,560 points)