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CIC publishes new standard forms of collateral warranty for consultants

Posted: 1st August 2003

The Construction Industry Council (CIC) have published this month new standard forms of collateral warranty for consultants to give to funders and purchasers/tenants in respect of commercial or industrial developments.
The CIC forms of collateral warranty have been based on the BPF forms of collateral warranties for funders and purchasers/tenants which were published in 1992/93 but they have been updated to take account of changes in the law since that time. These new forms are suitable for use in England and Wales and Scotland.

Liability under the CIC warranty for the purchasers/tenants is limited to the cost of repairs only, as under the BPF form of warranty, and the CIC forms for both funders and purchasers/tenants contain net contribution clauses, again as in the BPF forms. The step-in rights in the CIC funders’ warranty are substantially unchanged from those in the BPF forms. The licence clauses in both CIC forms are similar to those in the BPF forms save that the licence in respect of the documents needed for the health and safety file is not subject to the payment of fees.

The CIC forms have been updated as follows:
• The net contribution clause has been amended to take account of the decision in the Co-operative Retail Services case.
• There is no longer a need to list in the net contribution clause the other consultants and third parties with whom the consultant can be jointly liable: these parties are now referred to generically.
• The consultant is entitled to rely on any exclusion of liability in the appointment in addition to any limitation of liability as it is anticipated consultants will be excluding liability in respect of terrorism and asbestos claims following the withdrawal of cover for these claims by professional indemnity insurers.
• The deleterious materials clause refers to the Arup publication “Good Practice in Selection of Construction Materials”.
• The obligation to maintain professional indemnity insurance now refers to the aggregate cover available for pollution and contamination, asbestos and date recognition.
• Assignment of the purchaser/tenant warranty is limited to twice only and the funder’s warranty to another funder only.
• The time for bringing claims is to be limited to a number of years (which is to be inserted as before) from practical completion or if that is not achieved from the date the consultant finishes its services.
• The Contracts (Rights of Third Parties) Act 1999 has been excluded.
This note is reproduced with the kind permission of Beale & Company, solicitors, who assisted in drafting the warranties.