Simon
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posted on 2/6/13 at 08:06 PM |
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Collateral warranty
Folks
We are doing a job for our client (sculptor) who has been commissioned by a building firm, on behalf of a local council to do a sculpture, which we
will then cast into bronze, finish and install.
The "local council" is insisting on a "collateral warranty" which I've never heard of. The work is actually finished and
paid for and just needs installing. We have told them that we agree to finish to our usual high standards, and will repair any fault arising (and
caused by us) for a reasonable time, and that any public liability is down to them (we have no insurable interest after it's installed - it
being owned by the council).
Have any of you dealt with this sort of thing before - any points of view/info gladly received
Cheers
ATB
Simon
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snapper
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posted on 2/6/13 at 08:16 PM |
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If this was not a requirement on commision I don't honk itwill stand
I eat to survive
I drink to forget
I breath to pi55 my ex wife off (and now my ex partner)
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jacko
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posted on 2/6/13 at 08:21 PM |
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http://www.out-law.com/en/topics/projects--construction/construction-contracts/why-are-collateral-warranties-necessary/
Try a Google
Jacko
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Simon
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posted on 2/6/13 at 08:46 PM |
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Tried a google, was after personal experience of them, hence the post
ATB
Simon
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jacko
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posted on 2/6/13 at 08:49 PM |
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OK
Jacko
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big-vee-twin
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posted on 2/6/13 at 08:50 PM |
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Collateral warranty ties you to the builder, the idea being if the sculptor goes bust there is a contractual arrangement between you and the
builder.
Generally the builder is looking for a way to claim from you if the sculptor goes bust and something goes wrong.
A collateral warranty will make you responsible for 12 years post completion and can be transferred by the builder to other third parties.
Builders usually refuse to settle your account until you have signed.
If you are fully paid up then I would simply refuse.
Done this myself last week. Ask yourself a simple question - what benefit is the warranty to me- the answer will be nothing.
Do not sign.
Duratec Engine is fitted, MS2 Extra V3 is assembled and tested, engine running, car now built. IVA passed 26/02/2016
http://www.triangleltd.com
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Simon
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posted on 2/6/13 at 09:15 PM |
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My thoughts too. We've only had a draft and it looks like a crock of shite conjured up by a bored solicitor and typed by a really bored
secretary.
I've said all along (and in writing to them), that we'll do our usual good job, fix any defects that are our fault within a reasonable
timeframe but won't be liable for any probs as a result of vandalism/frost etc etc etc. Also said that any expenses we hadn't budgeted for
(like legal) would be subject to surcharge.
I think that in the best part of 40 years of trading, this is the first time we've been asked for this kind of stuff. They also want us to have
Method Statement (for installation), confirmation of our H&S policy (yep, right), PL insurance in case someone impales themself (on an ear for eg
- it's a horse). Basically told them to dream on.
Cheers for info
ATB
Simon
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big-vee-twin
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posted on 2/6/13 at 09:23 PM |
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I get asked for them all the time, and quite happily sign them as it is part of the process but I charge £1250-1500 to sign one as the insurer's
have to comment and company lawyer gets involved.
However, if someone tries to get me to sign one in retrospect- 'well why would I do that where's the benefit for me in doing so'-
stock answer!
Don't see the point for what you do.
Duratec Engine is fitted, MS2 Extra V3 is assembled and tested, engine running, car now built. IVA passed 26/02/2016
http://www.triangleltd.com
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Theshed
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posted on 3/6/13 at 07:31 AM |
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I am a little confused about your comment that you would not have an "insurable interest" for PL insurance. Do you not have product
liability insurance against death/PI etc? The ownership of the sculpture will not affect that liability.
What are they asking you to warrant? Usually the third party will be looking for the benefit of the implied term as to quality. Without the warranty
if the goods fail the quality test the Council will sue the Artist and He will sue you (unless he/she is insolvent).
I agree that if the contracts have already been formed and completed there is no great incentive to give a warranty.
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Simon
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posted on 3/6/13 at 05:15 PM |
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quote: Originally posted by Theshed
I am a little confused about your comment that you would not have an "insurable interest" for PL insurance. Do you not have product
liability insurance against death/PI etc? The ownership of the sculpture will not affect that liability.
What are they asking you to warrant? Usually the third party will be looking for the benefit of the implied term as to quality. Without the warranty
if the goods fail the quality test the Council will sue the Artist and He will sue you (unless he/she is insolvent).
I agree that if the contracts have already been formed and completed there is no great incentive to give a warranty.
Of course ownership affects liability, otherwise you wouldn't be insuring your car, the manufacturer would. But yes, we do have insurance, but
the building firm is under the impression it's for them!
We should be installing next week, so hopefully, that'll be the end of it, but like I said, we are happy to fix anything that was caused by us,
but it might be nice to tie them in with a maintenance contract.
ATB
Simon
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Theshed
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posted on 4/6/13 at 04:56 PM |
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Errm - you are wrong! The manufacturer of an article does owe a duty of care to any person that it might foreseeably injure by reason of defects.
Obviously a car manufacturer does not insure against the subsequent purchaser's negligent driving but they most certainly can and almost
certainly do have product liability insurance.
The expression "insurable interest" is used where goods are insured for their value. Once sold the seller has no insurable interest and
cannot claim on any insurance property in respect of theft or damage.
You are mixing up all sorts of concepts. I hope the transaction goes smoothly for you.
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Padstar
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posted on 4/6/13 at 06:00 PM |
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Collateral Warranty documents are unfortunately one of the items i have to deal with on an almost daily basis. I am not sure of the value of your work
but;
They grant a 3rd party step in rights to a primary contract in the instance that a party of the primary contract defaults on the initial agreement
(normally if they go bust).
They are normally but not exclusively used in instances where design is involved - hence the 12 year tie in (you are obliged to maintain Profesional
Indemnity insurance for 12 years after completion of any project if you have design input).
An example i completed today - We (Main Contractor) have a Building Contract with An Other (The Client). We employ Joe Bloggs (The Sub
Contractor/Consultant) to complete the installation of the windows. They sign a Co Wa so that in the instance we go out of business the Client can
step in and gain all the contractual rights we have over the Sub Contractor as if he were us.
I have done them in the past where they only cover the workmanship but this is very rare and wouldnt require a 12 year comitment.
Generally they are of minimal risk as they are offering very little rights other than this you would have under your contract with your Client.
As other have said if i were asked to sign one afer i had completed the works and it had no contractual restriction on my payment then i would either
refuse or demand payment for it. It does tie you in to obligations so most reasonable people will accept that a Co Wa attracts a cost.
Be carefull of how many beneficiaries you are required to honour. Try and limit it to one as otherwise you will have every tom dick and harry with a
vested interest in the work asking you to sign further documents and it can become a pain for little if any gain.
Just my 2 pence worth.
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Padstar
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posted on 4/6/13 at 06:54 PM |
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Also people seem to be getting confused with the shorthand of "PL". This can be Products Liability or Public Liability. Completely
different things. In this instance I guess they are asking for Public Liability insurance which in my opinion is a completely reasonable request.
This would be used if for instance you dropped the sculpture when installing and it injured a passer by. They would then claim on your policy. Once
the install is complete you would not be liable. Unless you had to provide Products Liability or Profesional Indemnity insurance.
Public Liability costs very little and is a common requirement now days other than for "private jobs". We insist on everyone having Public
Liability. One of my sites has over 500 individuals on and each has this insurance from labourer, machine driver or manager. Whilst we also carry
insurance it acts as damage limitation. If for instance someone dropped a hammer from the scaffold and it hit someone their policy would be the first
point of call.
The more insurance policies in place the better in my opinion.
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Simon
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posted on 4/6/13 at 08:00 PM |
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quote: Originally posted by Padstar
This would be used if for instance you dropped the sculpture when installing and it injured a passer by. They would then claim on your policy. Once
the install is complete you would not be liable. Unless you had to provide Products Liability or Profesional Indemnity insurance.
My thoughts exactly.
As for the design, it's a sculpture, we had no design input, we magically take the clients clay sculpture and make it bronze. It's the
client's design and was approved by his buyer.
ATB
Simon
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Padstar
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posted on 4/6/13 at 09:11 PM |
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As such you should only be expected to to carry Public Liability insurance to cover any potential instances during install. The design of the
sculpture itself and the fixings used to hold it in place would lay with the designer (architect or structural engineer) who should then whiteness
your install and approve it - thus being covered by their Profesional Indemnity insurance in case of design failure or the fabricators Product
Liability insurance in case of product failure.
Sounds like the council either don't know what they are talking about (as usual) or are trying to pull a fast one to get you to sign up to a 3rd
party agreement and in turn reducing their risk. Can't blame them for trying but can't see why they would insist on you signing a Co Wa.
If you find it's a case you are being forced to sign for payment etc I don't mind passing my eye over it and commenting.
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Simon
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posted on 4/6/13 at 09:56 PM |
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I've emailed the building firm explaining our position and that we didn't price in for any of this legal bull they are coming up with. If
the council are insistent on going down that route, then they will be responsible for all our legal fees and incurred costs - they were told this some
months back. I've suggested they agree to a maintenance contract instead.
Thanks for the offer. Fortunately they've only sent a draft which looks like a pile of cack. Will see what their response is to my comments
first.
May be approaching the FSB to see if it's something we can get looked at for free under their legal scheme.
Cheers again
ATB
Simon
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Theshed
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posted on 5/6/13 at 09:14 AM |
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quote: Originally posted by Simon
quote: Originally posted by Padstar
This would be used if for instance you dropped the sculpture when installing and it injured a passer by. They would then claim on your policy. Once
the install is complete you would not be liable. Unless you had to provide Products Liability or Profesional Indemnity insurance.
My thoughts exactly.
As for the design, it's a sculpture, we had no design input, we magically take the clients clay sculpture and make it bronze. It's the
client's design and was approved by his buyer.
ATB
Simon
Sorry folks but that is just not right. I mean the "one the install is complete" bit. You most certainly can be liable - for death or
injury - for anything you supply. This does not depend on any contractual relationship but arises in tort. For that reason anybody who makes and sells
anything would be well advised to have product liability insurance. Just think about it if for example the casting was full of voids, in breach of the
design, and little tommy falls when a bit breaks off - that is just the sort of situation where you need insurance. It would not matter whether that
happened before during or after installation. Ok Ok I know it is unlikely but that is not the point.
Sorry about the legal bull - that's the day job!
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