Contributed By Hawkins Hatton Corporate Lawyers Ltd
This is where a percentage (often 5%) of the amount certified as due to the contractor on an interim certificate is deducted from the amount due and retained by the client. The reason for the retention is to encourage the contractor to fully discharge its duties under the contract.
Limitations and Exclusion of Liability
The three most common forms of limiting liability are:
Collateral warranties are agreements which are related with another 'primary' contract. They extend the duty of care by one of the contracting parties to a third party who is not party to the primary contract. By way of example an architect of a new development owes a duty of care to an occupier of the development despite the fact there is no contractual relationship between the architect and subsequent occupier.