NEC 3 Supply Contract - Collateral Warranties

As the principal contractor we are under contract with our client under a NEC3 ECC Option C form of contract with amendments and Z clauses. One of the Z clauses is regarding Collateral Warranties and the flow down of CW’s to our subcontractors and consultants. We have subsequently entered into contract with a key project supplier, under a NEC3 Supply Contract. The supply form of contract does not utilise Option X8 and we haven’t flown down the CW requirements to our supplier. Our Client has instructed us, via PMI, to provide a CW from the supplier. Could the Supplier in this instance be considered a subcontractor and are we required to act upon the instruction and instruct our supplier to provide a CW?

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How they are defined in your contract will depend on what they were supplying? They can be a Subcontractor in the ECC if they are to “supply Plant and Materials which … has wholly or partly designed specifically for the works” which is taken from the definition of the term Subcontractor at clause 11.2(17).

If they are and the Z clause makes specific reference to warranties being required from all Subcontractors with design responsibility then you have an obligation to provide a warranty. In this case if you don’t act on the instruction you will be in breach of contract. What this means in your contract will depend on the wording of the Z clause, it may be purely a technical breach or it may give the Employer the right to procure the warranty and charge you for it.

You can try instructing the supplier to provide a warranty but if they have no contractual obligation with you to do so you may have to pay for it.