NEC4 Option A: X8 and Y(UK)3

NEC3 and NEC4 Contracts
1

We are drafting Contract Data for contract for works on a leased building to include Secondary Option X8 requiring a Collateral Warranty with Main Contractor and Building Owner.
By using an X8 undertaking (Collateral Warranty) in favour of the Owner (3rd Party), then we are not relying on Y(UK)3 for the 3rd part rights.

So, what do you do to Y(UK)3 when using X8? Is there a conflict?

  1. If we expressly exclude Y(UK)3 by stating “none”, then do we contradict X8 that asks for the Collateral Warranty for a 3rd party?
    or
  2. Do you need to strike through Y(UK)3 altogether? Although i believe you cant exclude rights under statute law that way?
    or
  3. Do we refer to the X Warranty in the Y(UK)3 option?
    i.e Term = X8 Warranty Beneficiary = Building Owner.

Comment and opinion much appreciated.

1 Like
2

You could use either X8 or Y(UK)3 to create ‘3rd Party’ rights, although I suspect that the collateral warranty may be required to contain numerous specific considerations, such as signed as a deed, etc.

Where you select secondary option X8 then you would expressly exclude any Beneficiary rights under the UK Contracts (Rights of Third Parties) Act 1999 by selecting secondary option Y(UK)3 and then entering ‘none’ in the contract data entry for the term and beneficiary.

There would be no conflict as this essentially means that rights are not provided via statute, although rights would still be accrued under contract (the collateral warranty).