for the Employer 2016

Sub-Contractor Collateral Warranty

All parties must rely exclusively upon their own skill and
judgment or upon those of their advisers when using this
document and neither Thomson Reuters (Professional) UK
Limited nor its associated companies assume any liability to
any user or any third party in connection with such use.

SCWa/E 2016
Sub-Contractor Collateral Warranty
for the Employer 2016

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COLLATERAL WARRANTIES

SCWa_E PRINT VERSION COVER SPREAD.indd 1 28/10/2016 09:48:13

Sub-Contractor Collateral Warranty for the Employer (SCWa/E)

This Warranty may be given by a sub-contractor to an employer (‘Employer’) for proposed building works let or to be let
under:

 a JCT Standard Building Contract (SBC); or

 a JCT Intermediate Building Contract (IC); or

 a JCT Intermediate Building Contract with contractor’s design (ICD); or

 a JCT Design and Build Contract (DB); or

 a JCT Prime Cost Building Contract (PCC).

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Published November 2016 by Thomson Reuters (Professional) UK Limited, trading as

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(Registered in England and Wales, Company No 1679046. Registered Office and address for service:
2nd floor, 1 Mark Square, Leonard Street, London EC2A 4EG).
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For details of 2016 Edition changes, see the Guidance Notes and the Tracked Change Document.

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Paper from
responsible sources

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© The Joint Contracts Tribunal Limited 2016

www.jctltd.co.uk
 Contents

Warranty Agreement Page 1

Warranty Particulars 7

Attestation 8

Guidance Notes 17

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© The Joint Contracts Tribunal Limited 2016  SCWa/E 2016  Page i

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Page ii  SCWa/E 2016 © The Joint Contracts Tribunal Limited 2016
 Warranty Agreement

This Agreement is made the _________________________ 20 _________

Between (1) ______________________________________________________________________________

______________________________________________________________________________

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[1]
_________________________________________________ (Company No._______________)

of/whose registered office is at _____________________________________________________

______________________________________________________________________________
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____________________________________________________________ (‘the Sub-Contractor’)

And (2) ______________________________________________________________________________

______________________________________________________________________________
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[1]
_________________________________________________ (Company No._______________)

of/whose registered office is at _____________________________________________________

______________________________________________________________________________
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____________________________________________________________ (‘the Main Contractor’)

__________________________________________________________________________________________________

[1] Where the Sub-Contractor, Main Contractor or Employer is neither a company incorporated under the Companies Acts nor a company
registered under the laws of another country, delete the references to Company number and registered office. In the case of a company
incorporated outside England and Wales, particulars of its place of incorporation should be inserted immediately before its Company
number.

© The Joint Contracts Tribunal Limited 2016  SCWa/E 2016  Page 1

And (3) ______________________________________________________________________________

______________________________________________________________________________

[1]
_________________________________________________ (Company No._______________)

of/whose registered office is at _____________________________________________________

______________________________________________________________________________

_________________________________________________________________ (‘the Employer’,

which term shall include all permitted assignees under this Agreement).

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Page 2  SCWa/E 2016 © The Joint Contracts Tribunal Limited 2016

 Whereas

First the Employer has entered into an agreement dated __________________________ with the Main
Contractor (‘the Building Contract’) for the carrying out of building works

__________________________________________________________________________

__________________________________________________________________________

_____________________________________________________ (‘the Main Contract Works’,

which term shall include any changes made to the building works in accordance with the Building
Contract);

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Second in relation to the Building Contract, the Sub-Contractor entered into an agreement (‘the Sub-
Contract’) dated _______________________ with the Main Contractor, to carry out and complete
certain works (‘the Sub-Contract Works’) forming part of the Main Contract Works;

Third the Main Contractor is a Party to this Agreement for the purpose of giving the acknowledgements
set out in clauses 5 and 6.4;
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© The Joint Contracts Tribunal Limited 2016  SCWa/E 2016  Page 3

 Now it is hereby agreed as follows

In consideration of the payment of one pound (£1) by the Employer to each of the Contractor and the
Sub-Contractor, receipt of which each acknowledges:

1 .1 The Sub-Contractor warrants and undertakes to the Employer that he has complied and will
continue to comply with the Sub-Contract. In the event of any breach of this warranty and
subject to clauses 1.2, 1.3 and 1.4:

.1 the Sub-Contractor shall be liable for the reasonable costs of repair, renewal and/or
reinstatement of any part or parts of the Sub-Contract Works to the extent that the
Employer incurs such costs and/or the Employer is or becomes liable either directly or
by way of financial contribution for such costs; and

.2 where the Warranty Particulars state that clause 1.1.2 applies, but subject to clause
1.2, the Sub-Contractor shall in addition to the costs referred to in clause 1.1.1 be liable

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for any other losses incurred by the Employer up to the limit, if any, stated in the
Warranty Particulars;

.2 where in the Warranty Particulars no single liability option is selected for clause 1.1.2 or
where the selected option has a limit but no amount is stated, the Sub-Contractor shall not be
liable for any losses incurred by the Employer other than the costs referred to in clause 1.1.1;

.3 where the Warranty Particulars state that clause 1.3 applies, the Sub-Contractor’s liability to
the Employer under this Agreement shall be limited to the proportion of the Employer’s losses
which it would be just and equitable to require the Sub-Contractor to pay having regard to the
extent of the Sub-Contractor’s responsibility for the same, on the following assumptions,
namely that:
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.1 the Consultant(s) (as defined in the Sub-Contract) has or have provided contractual
undertakings to the Employer as regards the performance of his or their services in
connection with the Main Contract Works in accordance with the terms of his or their
respective consultancy agreements and that there are no limitations on liability as
between the Consultant and the Employer in the consultancy agreement(s);
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.2 the Main Contractor has provided contractual undertakings to the Employer that he has
complied and will continue to comply with his obligations under the Building Contract
but, for the purposes of this clause 1.3, excluding any liability for work sub-contracted
to the Sub-Contractor; and

.3 the Consultant(s) and the Main Contractor have paid to the Employer such proportion of
the Employer’s losses which it would be just and equitable for them to pay having
regard to the extent of their responsibility for the Employer’s losses;

.4 the Sub-Contractor shall be entitled in any action or proceedings by the Employer to rely on
any term in the Sub-Contract and to raise the equivalent rights in defence of liability as he
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would have against the Main Contractor under the Sub-Contract;

.5 the obligations of the Sub-Contractor under or pursuant to this clause 1 shall not be released
or diminished by the appointment of any person by the Employer to carry out any independent
enquiry into any relevant matter.

2 The Sub-Contractor further warrants to the Employer that:

.1 he has exercised and will exercise reasonable skill, care and diligence in:

.1 the design of the Sub-Contract Works to the extent that such works have been or will
be designed by the Sub-Contractor; and

.2 the selection of materials and goods for the Sub-Contract Works to the extent that such
materials and goods have been or will be selected by the Sub-Contractor;

.2 he will satisfy any performance specification or requirement contained in or referred to in the

Sub-Contract;

Page 4  SCWa/E 2016 © The Joint Contracts Tribunal Limited 2016

continued 2 .3 he has not used nor will he use any materials or goods which at the time of use do not
conform with British and European Standards or Codes of Practice; and that unless required
by the Sub-Contract or unless otherwise authorised in writing by the Main Contractor, he has
not used and will not use materials in the Sub-Contract Works other than in accordance with
the guidelines contained in the edition of ‘Good Practice in Selection of Construction
Materials’ (British Council for Offices) current at the date of the Building Contract.

3 The Employer has no authority to issue any direction or instruction to the Sub-Contractor in relation to
the Sub-Contract unless and until the Employer has given notice under clause 5 or 6.4.

4 The Employer has no liability to the Sub-Contractor in respect of amounts due under the Sub-
Contract unless and until the Employer has given notice under clause 5 or 6.4.

5 The Sub-Contractor agrees that, in the event of the termination of the Main Contractor’s employment
under the Building Contract, the Sub-Contractor shall, if so required by written notice given by the
Employer and subject to clause 7, accept the instructions of the Employer or his appointee to the
exclusion of the Main Contractor in respect of the Sub-Contract Works upon the terms and conditions
of the Sub-Contract. The Main Contractor acknowledges that the Sub-Contractor shall be entitled to
rely on a notice given to the Sub-Contractor by the Employer under this clause 5 as conclusive

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evidence for the purposes of this Agreement of the termination of the Main Contractor’s employment
under the Building Contract; and further acknowledges that such acceptance of the instructions of the
Employer to the exclusion of the Main Contractor shall not constitute any breach of the Sub-
Contractor’s obligations to the Main Contractor under the Sub-Contract.

6 .1 The Sub-Contractor shall not exercise any right of termination of his employment under the
Sub-Contract without having first:

.1 copied to the Employer any notices required by the Sub-Contract to be sent to the Main
Contractor prior to the Sub-Contractor being entitled to give notice under the Sub-

.2
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Contract that his employment under the Sub-Contract is terminated; and

given to the Employer written notice that the Sub-Contractor has the right under the
Sub-Contract forthwith to notify the Main Contractor that his employment under the
Sub-Contract is terminated.

.2 The Sub-Contractor shall not treat the Sub-Contract as having been repudiated by the Main
Contractor without having first given to the Employer written notice that he intends so to notify
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the Main Contractor.

.3 The Sub-Contractor shall not:

.1 issue a notice to the Main Contractor to which clause 6.1.2 refers; or

.2 notify the Main Contractor that he is treating the Sub-Contract as having been
repudiated by the Main Contractor as referred to in clause 6.2

before the lapse of 14 days from receipt by the Employer of the notice by the Sub-Contractor
which the Sub-Contractor is required to give under clause 6.1.2 or 6.2.
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.4 The Employer may, not later than the expiry of the period referred to in clause 6.3, require the
Sub-Contractor by written notice and subject to clause 7 to accept the instructions of the
Employer or his appointee to the exclusion of the Main Contractor in respect of the Sub-
Contract Works upon the terms and conditions of the Sub-Contract. The Main Contractor
acknowledges that the Sub-Contractor shall be entitled to rely on a notice given to the Sub-
Contractor by the Employer under this clause 6.4 and that acceptance by the Sub-Contractor
of the instruction of the Employer to the exclusion of the Main Contractor shall not constitute
any breach of the Sub-Contractor's obligations to the Main Contractor under the Sub-Contract.
Provided that nothing in this clause 6.4 shall relieve the Sub-Contractor of any liability he may
have to the Main Contractor for any breach by the Sub-Contractor of the Sub-Contract.

7 It shall be a condition of any notice given by the Employer under clause 5 or 6.4 that the Employer
accepts liability for payment of the sums due and payable to the Sub-Contractor under the Sub-
Contract and for performance of the Main Contractor’s obligations including payment of any sums
outstanding at the date of such notice. Upon the issue of any notice by the Employer under clause 5
or 6.4, the Sub-Contract shall continue in full force and effect as if no right of termination of the Sub-
Contractor’s employment under the Sub-Contract, nor any right of the Sub-Contractor to treat the
Sub-Contract as having been repudiated by the Main Contractor, had arisen and the Sub-Contractor
shall be liable to the Employer under the Sub-Contract in lieu of his liability to the Main Contractor.

© The Joint Contracts Tribunal Limited 2016  SCWa/E 2016  Page 5

 8 All rights including copyright in all Sub-Contractor’s Design Documents (as defined in the Sub-
Contract), if any, shall remain vested in the Sub-Contractor but, subject to the Sub-Contractor having
received all sums due and payable under the Sub-Contract, the Employer shall have an irrevocable,
royalty-free, non-exclusive licence to copy and use the Sub-Contractor’s Design Documents and to
reproduce the designs and content of them for any purpose relating to the Main Contract Works
including, without limitation, the construction, completion, maintenance, letting, sale, promotion,
advertisement, reinstatement, refurbishment and repair of the Main Contract Works. Such licence
shall enable the Employer to copy and use the Sub-Contractor’s Design Documents for an extension
of the Main Contract Works but shall not include any right or licence to reproduce the designs
contained in them for any extension of the Main Contract Works. The Sub-Contractor shall not be
liable for any such use by the Employer of any of the Sub-Contractor’s Design Documents for any
purpose other than that for which they were prepared.

9 Where the Sub-Contract requires the Sub-Contractor to take out and maintain Professional Indemnity
or Product Liability insurance, the Sub-Contractor warrants that he has and shall maintain that
insurance in the amount, on the terms and for the period referred to in the Sub-Contract, provided
always that such insurance is available at commercially reasonable rates. The Sub-Contractor shall
immediately give written notice to the Employer if such insurance ceases to be available at
commercially reasonable rates in order that the Sub-Contractor and the Employer can discuss the

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means of best protecting their respective positions in respect of the Sub-Contract Works in the
absence of such insurance. As and when reasonably requested to do so by the Employer or his
appointee under clause 5 or 6.4, the Sub-Contractor shall produce for inspection documentary
evidence that his insurance is being maintained.

10 This Agreement may be assigned without the Sub-Contractor’s consent by the Employer, by way of
absolute legal assignment, to another person (P1) and by P1, by way of absolute legal assignment,
to another person (P2). In such cases the assignment shall only be effective upon written notice of it
being given to the Sub-Contractor. No further or other assignment of this Agreement will be permitted
and in particular P2 shall not be entitled to assign this Agreement.

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Any notice to be given by the Sub-Contractor to the Employer or by the Employer to the Sub-
Contractor shall be duly given if delivered by hand or sent by Recorded Signed for or Special Delivery
post to the recipient at such address as he may from time to time notify to the sender or (if no such
address is then current) his last known principal business address or (where a body corporate) its
registered or principal office. Where sent by post in that manner, it shall, subject to proof to the
contrary, be deemed to have been received 48 hours after the date of posting.
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12 No action or proceedings for any breach of this Agreement shall be commenced against the Sub-
Contractor after the expiry of the relevant period from the date of practical completion of the Main
Contract Works. Where the Main Contract provides for completion by Sections, no action or
proceedings shall be commenced against the Sub-Contractor in respect of any Section after the
expiry of the relevant period from the date of practical completion of such Section. For the purposes
of this clause, the relevant period shall be:

.1 where this Agreement is executed under hand, 6 years; and

.2 where this Agreement is executed as a deed, 12 years.

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13 This Agreement shall not negate or diminish any duty or liability otherwise owed by the Sub-
Contractor to the Employer.

14 Notwithstanding any other provision of this Agreement nothing in this Agreement confers or is
intended to confer any right to enforce any of its terms on any person who is not a party to it.

15 This Agreement shall be governed by and construed in accordance with the law of England and the
English courts shall have jurisdiction over any dispute or difference.

Page 6  SCWa/E 2016 © The Joint Contracts Tribunal Limited 2016

 Warranty Particulars

Note: An asterisk * indicates text that is to be deleted as appropriate.

These particulars should be completed in accordance with the related Sub-Contract Documents.

Clause Subject

1.1.2 Sub-Contractor’s liability for other losses Clause 1.1.2

incurred by Employer * applies/does not apply

Maximum liability – options * Liability is limited to £ _________________

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(Clause 1.1.2 shall not apply unless stated to in respect of each breach/
apply and unless one of the three liability * Liability is limited to £ ___________________
options is selected, with the specified limit under this Agreement/
inserted where appropriate.) * Liability is unlimited

1.3 Net Contribution Clause 1.3

(Clause 1.3 shall not apply unless it is stated to * applies/does not apply
apply.)
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© The Joint Contracts Tribunal Limited 2016  SCWa/E 2016  Page 7

 Attestation

Note on Execution

This Agreement should be executed by all Parties, i.e. the Sub-Contractor, the Main Contractor and the
Employer, either under hand or as a deed.

Execution under hand

If this Agreement is to be executed under hand, use the form set out on the following page. Each Party
or his authorised representative should sign where indicated in the presence of a witness who should

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then sign and set out his name and address.

Execution as a Deed

If this Agreement is to be executed as a deed, each Party should use the relevant form marked
‘Execution as a Deed’ in accordance with the notes provided.

Other forms of Attestation

In cases where the forms of attestation set out are not appropriate, e.g. in the case of certain housing
associations and partnerships or if a Party wishes an attorney to execute this Agreement on his behalf,
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the appropriate form(s) may be inserted in the vacant space opposite and/or below.
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Page 8  SCWa/E 2016 © The Joint Contracts Tribunal Limited 2016

 Execution under hand

As witness the hands of the Parties

or their duly authorised representatives

Signed by or on behalf of
the Sub-Contractor ___________________________________________________________

in the presence of:

_______________________________________
witness’ signature

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_______________________________________
witness’ name

_______________________________________
witness’ address

_______________________________________
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Signed by or on behalf of
the Main Contractor ___________________________________________________________

in the presence of:

_______________________________________
witness’ signature
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_______________________________________
witness’ name

_______________________________________
witness’ address

_______________________________________
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Signed by or on behalf of
the Employer ___________________________________________________________

in the presence of:

_______________________________________
witness’ signature

_______________________________________
witness’ name

_______________________________________
witness’ address

_______________________________________

© The Joint Contracts Tribunal Limited 2016  SCWa/E 2016  Page 9

 Notes on Execution as a Deed
1 For the purposes of execution as a deed, three forms are provided for execution, one for the Sub-
Contractor, one for the Main Contractor and the other for the Employer. Each form provides four
methods of execution, (A) to (D), for use as appropriate. The full name of the Sub-Contractor,
Main Contractor or Employer (whether an individual, a company or other body) should be inserted
where indicated at the commencement of the relevant form. This applies irrespective of the
method used.

2 For public and private companies incorporated and registered under the Companies Acts, the
three principal methods of execution as a deed are:

(A) through signature by a Director and the Company Secretary or by two Directors;

(B) by affixing the company’s common seal in the presence of a Director and the Company
Secretary or of two Directors or other duly authorised officers; or

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(C) signature by a single Director in the presence of a witness who attests the signature.

Methods (A) and (C) are available to public and private companies whether or not they have a
common seal. (Method (C) was introduced by section 44(2)(b) of the Companies Act 2006.)
Methods (A) and (C) are not available under companies legislation to local authorities or to certain
other bodies corporate, e.g. bodies incorporated by letters patent or private Act of Parliament that
are not registered under companies legislation and such bodies may only use method (B).

3 Where method (A) is being used, delete the inappropriate words and insert in the spaces
indicated the names of the two Directors, or of the Director and the Company Secretary, who are
to sign.

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If method (B) (affixing the common seal) is adopted in cases where either or both the authorised
officers attesting its affixation are not themselves a Director or the Company Secretary, their
respective office(s) should be substituted for the reference(s) to Director and/or to Company
Secretary/Director. (In the case of execution by bodies that are not companies, the reference to
“Company” under the second signature should be deleted where appropriate.)

5 Method (C) (execution by a single Director) has been introduced primarily, but not exclusively, for
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‘single officer’ companies. The Director should sign where indicated in the presence of a witness
who should then sign and set out his name and address.

6 Where the Sub-Contractor, Main Contractor or Employer is an individual, he should use method
(D) and sign where indicated in the presence of a witness who should then sign and set out his
name and address.
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 Execution as a Deed

Executed as a Deed by the Sub-Contractor

namely 1 __________________________________________

(A) acting by a Director and the Company Secretary/two Directors of the company 2, 3

_____________________________________ and _____________________________________

(Print name of signatory) (Print name of signatory)

_____________________________________ _____________________________________
Signature Director Signature Company Secretary/Director

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(B) by affixing hereto the common seal of the company/other body corporate 2, 4

in the presence of

_____________________________________
Signature Director
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_____________________________________
Signature Company Secretary/Director [Common seal of company]

(C) by attested signature of a single Director of the company 2, 5

_____________________________________
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Signature Director

in the presence of

Witness’ signature _____________________________ (Print name) _____________________________

Witness’ address ______________________________________________________________________

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(D) by attested signature of the individual 6

_____________________________________
Signature

in the presence of

Witness’ signature _____________________________ (Print name) _____________________________

Witness’ address ______________________________________________________________________

Note: The numbers on this page refer to the numbered paragraphs in the Notes on Execution as a Deed.

© The Joint Contracts Tribunal Limited 2016  SCWa/E 2016  Page 11

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 Execution as a Deed

Executed as a Deed by the Main Contractor

namely 1 __________________________________________

(A) acting by a Director and the Company Secretary/two Directors of the company 2, 3

_____________________________________ and _____________________________________

(Print name of signatory) (Print name of signatory)

_____________________________________ _____________________________________
Signature Director Signature Company Secretary/Director

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(B) by affixing hereto the common seal of the company/other body corporate 2, 4

in the presence of

_____________________________________
Signature Director
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_____________________________________
Signature Company Secretary/Director [Common seal of company]

(C) by attested signature of a single Director of the company 2, 5

_____________________________________
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Signature Director

in the presence of

Witness’ signature _____________________________ (Print name) _____________________________

Witness’ address ______________________________________________________________________

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(D) by attested signature of the individual 6

_____________________________________
Signature

in the presence of

Witness’ signature _____________________________ (Print name) _____________________________

Witness’ address ______________________________________________________________________

Note: The numbers on this page refer to the numbered paragraphs in the Notes on Execution as a Deed.

© The Joint Contracts Tribunal Limited 2016  SCWa/E 2016  Page 13

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 Execution as a Deed

Executed as a Deed by the Employer

namely 1 __________________________________________

2, 3
(A) acting by a Director and the Company Secretary/two Directors of the company

_____________________________________ and _____________________________________

(Print name of signatory) (Print name of signatory)

_____________________________________ _____________________________________
Signature Director Signature Company Secretary/Director

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2, 4
(B) by affixing hereto the common seal of the company/other body corporate

in the presence of

_____________________________________
Signature Director

Signature
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_____________________________________
Company Secretary/Director [Common seal of company]

2, 5
(C) by attested signature of a single Director of the company

_____________________________________
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Signature Director

in the presence of

Witness’ signature _____________________________ (Print name) _____________________________

Witness’ address ______________________________________________________________________

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(D) by attested signature of the individual 6

_____________________________________
Signature

in the presence of

Witness’ signature _____________________________ (Print name) _____________________________

Witness’ address ______________________________________________________________________

Note: The numbers on this page refer to the numbered paragraphs in the Notes on Execution as a Deed.

© The Joint Contracts Tribunal Limited 2016  SCWa/E 2016  Page 15

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Page 16  SCWa/E 2016 © The Joint Contracts Tribunal Limited 2016
 Guidance Notes

General
The JCT Warranty SCWa/E 2016 is for use with contracts let under SBC, IC, ICD, DB and PCC where
the Employer has an agreement with a person (‘Main Contractor’) who will carry out building works
(‘Main Contract Works’) required by the Employer.

Warranty SCWa/E is collateral to the Sub-Contract and, generally, should not be entered into before
the date of the Sub-Contract. Under the enabling clause in the appropriate Sub-Contract (clause 2.26
of the Conditions in SBCSub, SBCSub/D and DBSub; clause 2.18 in ICSub and ICSub/D), the Sub-
Contractor may be required to enter into the warranty. The Contractor should ensure that the
requirements for Collateral Warranties are made known to prospective sub-contractors before the Sub-

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Contract is entered into, the necessary details included in the Sub-Contract Rights Particulars and that
document included in the Sub-Contract as a Numbered Document.

Where the Warranty may be required to be entered into after the date of the Sub-Contract, it is
essential that, pre-contract, the Sub-Contractor is informed:

 of the way in which the clauses requiring completion within the Warranty will be completed; if
subsequently, the Warranty is to be completed on different terms then the agreement of the
Sub-Contractor to those different terms would be required; and


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if the Employer seeks to make any amendments to the terms of the Warranty SCWa/E which
he will require the Sub-Contractor (through the Main Contractor) to give, then the amendments
must be set out as part of the Sub-Contract tender documentation. Amendments to the
clauses of the Warranty SCWa/E should however be avoided.

Commentary
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Parties and Recitals

The Parties and the first two Recitals require completion and should conform with the notice to the
Sub-Contractor that requires him to execute this Warranty. Care should be taken in that notice to give
the correct particulars of the Employer.

As stated in the Third Recital, the Main Contractor is a Party to this Agreement for the purposes of the
acknowledgements given in clauses 5 and 6.4. This is to allow the Sub-Contractor to comply with the
obligations imposed upon him under those clauses, without being liable to the Main Contractor for
breach of contract.
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Clause 1

This confirms that the Sub-Contractor owes the same obligation to the Employer as he owes to the
Main Contractor under the Sub-Contract, but subject to clauses 1.2, 1.3 and 1.4.

Clauses 1.2, 1.3 and 1.4, where applicable, qualify and limit the Sub-Contractor’s liability in the event
of a breach by the Sub-Contractor of the Sub-Contract.

This Warranty provides under clause 1.1 that the Sub-Contractor is liable for the reasonable costs of
repair, renewal and/or reinstatement of the Sub-Contract Works to the extent that the Employer incurs
such costs or becomes liable for such costs. Additionally, the Sub-Contractor may be made liable for
further losses under clause 1.1.2 if in the Warranty Particulars it is stated that clause 1.1.2 applies.
Clause 1.1.2 provides in the Warranty Particulars for optional provisions whereby the losses are
capped either in respect of each breach or in respect of an aggregate; the amount of any financial cap
is to be inserted. The unlimited liability option should be selected if a financial cap is not to apply.
Whenever practicable the Employer, bearing in mind his obligation to mitigate damages he has
suffered, should inform the Sub-Contractor of the defects prior to having them repaired and consider
any offer by the Sub-Contractor to carry out the repair.

© The Joint Contracts Tribunal Limited 2016  SCWa/E 2016  Page 17

 Clause 1.2 is intended to make it clear that, where an option is not selected or where one is selected
but ‘no amount’ is inserted in the entries for clause 1.1.2 of the Warranty Particulars, the Sub-
Contractor is only liable for the losses referred to in clause 1.1.1.

Where clause 1.3 applies, it is also intended to limit the Sub-Contractor’s potential liability. The
Warranty given by the Sub-Contractor is based on the assumptions set out in clauses 1.3.1 to 1.3.3
and the limitation applies whether or not the Consultants employed by the Employer and/or the Main
Contractor have actually given contractual undertakings to the Employer. The Consultants are as
defined in the Sub-Contract.

By clause 1.4, and subject to clause 1.3, the Employer is intended to be in a similar position to the
Main Contractor in terms of enforcing rights under the Sub-Contract in that the Sub-Contractor may
raise against the Employer the same defences of liability as he could against the Main Contractor.

Clause 1.5 records that the appointment by the Employer of any consultant (e.g. to survey the
buildings comprising the Main Contract Works) shall not affect any liability which the Sub-Contractor
may have under clause 1.

Clause 2

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The Sub-Contractor warrants that he will satisfy any performance specification or requirement referred
to in the Sub-Contract and where he is involved in designing the Sub-Contract Works that he will use
reasonable skill, care and diligence.

The Sub-Contractor also warrants that he has not used and will not use materials in the Sub-Contract
Works other than in accordance with the guidelines contained in the publication ‘Good Practice in
Selection of Construction Materials’. Clause 2 excuses the use by the Sub-Contractor of other
materials if the use has been required or authorised in writing by the Main Contractor, though it should
be noted that the Sub-Contractor will in appropriate circumstances have a duty to warn against such
use.

Clause 3
IM
This is included to make it clear that the Employer has no power or authority to instruct the Sub-
Contractor in his duties to the Main Contractor under the Sub-Contract. This is however subject to the
Employer’s rights under clause 5, following termination of the Main Contractor’s employment under the
Building Contract, or under clause 6.4.
EC

Clause 4

As indicated by this clause, the Employer has no liability for any amounts due under the Sub-Contract
until he has given a notice under clause 5 or 6.4.

Clauses 5, 6 and 7

These clauses entitle the Employer to ‘step in’ and take over as employer of the Sub-Contractor and
oblige the Sub-Contractor to accept the instructions of the Employer, if the Employer so decides, in
circumstances where the Main Contractor’s employment is terminated or the Sub-Contractor intends to
SP

terminate his own employment under the Sub-Contract.

To give the Employer a reasonable time to decide whether to ‘step in’ under clause 6.4, clause 6.1
requires the Sub-Contractor to copy to the Employer any warning notice which has to be given under
the Sub-Contract before the Sub-Contractor can give notice to the Main Contractor that the Sub-
Contractor’s employment is terminated or, alternatively, to notify the Employer if the Sub-Contractor
considers that the Main Contractor has repudiated the Sub-Contract.

If the Sub-Contractor:

 is subsequently in a position to give to the Main Contractor actual notice of termination of the
Sub-Contractor’s employment under the Sub-Contract; or

 intends to notify the Main Contractor that he is treating the Sub-Contract as having been
repudiated by the Main Contractor,

the Sub-Contractor, by clause 6.3, may give such notice to the Main Contractor but not without having
first given the Employer at least 14 days notice that the Sub-Contractor’s right to termination has
actually arisen or, in the case of repudiation, that he intends so to notify the Main Contractor.

Page 18  SCWa/E 2016 © The Joint Contracts Tribunal Limited 2016
 The Employer may within that period act under clause 6.4 and give notice that he will take over the
rights and obligations of the Main Contractor but on the terms of clause 7 in regard to the Employer
accepting all the liabilities of the Main Contractor at the date of the takeover and agreeing to perform all
the Main Contractor’s obligations under the Sub-Contract.

Clause 8

This clause refers to Sub-Contractor’s Design Documents, as defined in the Sub-Contract, and will
therefore only be applicable where the Sub-Contractor carries out a design function in relation to the
Sub-Contract Works. By this clause the Employer is given the rights that might reasonably be expected
but it does not allow the reproduction of the designs for any purpose outside the scope of the Main
Contract Works; such reproduction would require a further agreement with the Sub-Contractor.

Clause 9

This clause will only be applicable where the Sub-Contractor is required under the Sub-Contract to
take out and maintain Professional Indemnity or Product Liability insurance. The undertaking given by
the Sub-Contractor in relation to such insurance is in the same terms as that given to the Main
Contractor under the Sub-Contract (clause 6.10 of SBCSub/D and DBSub; clause 6.14 of ICSub/D).

EN
Where clause 9 applies, it should be noted that:

 the obligation to maintain Professional Indemnity or Product Liability insurance is subject to the
proviso that such insurance continues to be available at commercially reasonable rates; if after
the insurance has been taken out the rates upon any renewal cease to be commercially
reasonable the Sub-Contractor must inform the Employer;

 Product Liability insurance cover is not a substitute or alternative to Professional Indemnity

insurance but may be of some limited benefit in certain circumstances;


IM
not all Sub-Contractors will have, or can obtain, Professional Indemnity or Product Liability
insurance and Employers must recognise this when seeking to operate the terms of clause 9.

Clause 10

This clause indicates the right of assignment by the Employer.

Clause 11
EC

This clause sets out the required methods of giving notice under this Agreement.

Clause 12

This clause makes clear that, unless proceedings have previously been commenced, any liability that
the Sub-Contractor has under this Warranty ceases on the expiry of the relevant period from the date
of practical completion of the Main Contract Works (or, where completed in Sections, practical
completion of the relevant Section).
SP

The relevant period is 6 or 12 years depending on whether this Agreement is to be executed under
hand or executed as a deed – see Attestation below.

Clause 13

This clause is to make clear that this Agreement does not affect any other obligations that the Sub-
Contractor might have to the Employer.

Clause 14

The JCT has agreed that this Warranty should contract out of the Contracts (Rights of Third Parties)
Act 1999.

Clause 15

It will be noted that this Agreement is to be governed by English law and that the English courts shall
have jurisdiction over any dispute or difference. If the Sub-Contract provides that it is to be governed
by the law of any other jurisdiction, this Warranty should generally be conformed with it.

Disputes under this Agreement are not intended to be referable to arbitration unless the Sub-
Contractor and the Employer otherwise agree, in which case a provision relating to the reference to

© The Joint Contracts Tribunal Limited 2016  SCWa/E 2016  Page 19

 arbitration and the conduct of any arbitration may be inserted. However, if an Employer ‘steps in’ to
replace the Main Contractor under the Sub-Contract (see clauses 5 and 6.4), the dispute resolution
provisions of the Sub-Contract would continue to apply to any dispute arising out of or in connection
with that contract.

Attestation

The prescribed mode of execution is in general intended to follow the mode adopted for the Building
Contract, i.e. where the latter is executed as a deed, this Agreement should also be executed as a
deed and, where executed under hand, this Agreement may also be executed under hand. Reference
should also be made to the enabling clause in the Sub-Contract.

EN
IM
EC
SP

Page 20  SCWa/E 2016 © The Joint Contracts Tribunal Limited 2016
SP
EC
IM
EN
SP
EC
IM
EN
SP
EC
IM
EN
 for the Employer 2016
Sub-Contractor Collateral Warranty
All parties must rely exclusively upon their own skill and
judgment or upon those of their advisers when using this
document and neither Thomson Reuters (Professional) UK
Limited nor its associated companies assume any liability to
any user or any third party in connection with such use.

SCWa/E 2016
Sub-Contractor Collateral Warranty
for the Employer 2016

EN
IM
EC
SP

2016
COLLATERAL WARRANTIES

SCWa_E PRINT VERSION COVER SPREAD.indd 1 28/10/2016 09:48:13