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Collateral Warranty Agreement Template for Australia

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Key Requirements PROMPT example:

Collateral Warranty Agreement

"I need a Collateral Warranty Agreement for a major hospital construction project in Brisbane, where multiple subcontractors will provide warranties to the Queensland Health Department as beneficiary, with a construction completion date of March 2025 and a 12-year liability period."

Document background
The Collateral Warranty Agreement is a crucial document in Australian construction and development projects where third parties require direct contractual rights against contractors or consultants. It is commonly used when purchasers, tenants, or funders need assurance about construction quality or professional services but are not party to the original contract. The document creates enforceable warranties regarding workmanship, design, and professional standards, typically including provisions for liability duration, insurance requirements, and assignment rights. This type of agreement is particularly important in commercial developments, infrastructure projects, and large-scale residential developments across Australian jurisdictions, where multiple stakeholders require protection of their interests through direct contractual relationships.
Suggested Sections

1. Parties: Identifies all parties to the agreement: the Contractor/Consultant (Warrantor), the Employer (Original Client), and the Beneficiary

2. Background: Sets out the context of the original contract and explains why the warranty is being given

3. Definitions and Interpretation: Defines key terms and establishes interpretation principles, including references to the original contract

4. Warrantor's Obligations: Core warranties regarding standard of care, compliance with original contract, and professional obligations

5. Duration of Liability: Specifies the period during which the warranty remains effective and when claims can be made

6. Assignment and Third Party Rights: Provisions regarding the right to assign the benefit of the warranty and number of permitted assignments

7. Limitations on Liability: Specified caps on liability and any exclusions, consistent with the original contract

8. Insurance: Requirements for professional indemnity and other relevant insurance coverage

9. Notices: Procedures for giving formal notices under the warranty

10. Governing Law and Jurisdiction: Specifies Australian law as governing law and jurisdiction for disputes

Optional Sections

1. Step-in Rights: Optional clause allowing the beneficiary to step into the original contract - typically included for project finance arrangements

2. Copyright License: Required when the warrantor has created designs or other copyright materials - grants license to use these materials

3. Deleterious Materials: Specific warranty regarding non-use of hazardous materials - particularly relevant for construction contractors

4. Performance Security: Include when additional security (bonds, parent company guarantees) is required

5. Novation Provisions: Include when there's a possibility of novating the agreement to another beneficiary

6. Professional Consultant Provisions: Specific provisions when the warrantor is a professional consultant rather than a contractor

Suggested Schedules

1. Schedule 1 - Original Contract Particulars: Details of the original contract including date, parties, and scope

2. Schedule 2 - Services/Works Description: Detailed description of the services or works covered by the warranty

3. Schedule 3 - Insurance Requirements: Specific insurance requirements including types, amounts, and duration

4. Schedule 4 - Form of Notice of Assignment: Template for formal notification of assignment of the warranty

5. Appendix A - Original Contract (Extract): Relevant excerpts from the original contract

6. Appendix B - Professional Indemnity Insurance Certificate: Copy of current insurance certificates

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈ˰æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions
















































Clauses




































Relevant Industries

Construction

Real Estate Development

Infrastructure

Commercial Property

Residential Development

Healthcare Facilities

Education Facilities

Industrial Development

Retail Development

Mining and Resources

Relevant Teams

Legal

Construction

Commercial

Development

Risk and Compliance

Operations

Procurement

Property Management

Technical Services

Project Management

Relevant Roles

Construction Manager

Project Director

Legal Counsel

Contract Administrator

Development Manager

Risk Manager

Commercial Manager

Property Manager

Procurement Manager

Design Manager

Technical Director

Operations Director

Compliance Officer

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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