6.3.1 The Authority should be very careful in warranting any information it provides. Warranties, to the extent given, should not extend beyond information on which the Contractor must rely for its bid. Accordingly, the Authority should seek to minimise the extent of any warranties, unless:
• the Authority is the sole source of such information or such information cannot be verified by the Contractor at reasonable cost;
• the Authority is confident in the accuracy of such information or is able to confirm its accuracy without significant expense (e.g. through surveys, in-house checks or inspections); and
• the Authority will obtain better value for money as a result (taking into account the overall risk allocation).
6.3.2 If the criteria listed in Section 6.3.1 are satisfied and the Authority gives certain warranties, this will help reduce the Contractor's costs. The Contract could then either contain a price variation mechanism to be employed if the information turns out to be inaccurate (rather than giving rise to a right to terminate) or give rise to a damages claim. An example of where warranties are likely to be appropriate is where employees are being transferred by the Authority to the Contractor or particular known risks exist in relation to a building (such as asbestos content).
6.3.3 Required drafting for warranty exclusion for Contracts in which warranties are not given by the Authority is as follows:
6.3 Exclusion from Warranty
(a) The Contractor shall be deemed to have:
(i) satisfied itself as to the assets to which it will acquire rights and the nature and extent of the risks assumed by it under this Contract; and
(ii) gathered all information necessary to perform its obligations under this Contract and other obligations assumed, including:
(A) information as to the nature, location and condition of the land (including hydrological, geological, geo-technical and sub-surface conditions);
(B) information relating to archaeological finds, areas of archaeological scientific or natural interest,112 local conditions and facilities and the quality of existing structures; and
(iii) [other relevant information (e.g. environmental contamination)].113
(b) The Contractor shall not in any way be relieved from any obligation under this Contract nor shall it be entitled to claim against the Authority on grounds that any information, whether obtained from the Authority or otherwise (including information made available by the Authority) is incorrect or insufficient and shall make its own enquiries as to the accuracy and adequacy of that information.
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112 See Section 5.1.4 above for the treatment of fossils and antiquities in certain projects.
113 The value of environmental warranties/indemnities will need to be reviewed on a project specific basis, taking into account the considerations outlined in Section 6.3.1 (Authority Warranties). In certain circumstances, for example, it may prove better value for money for the Authority to provide environmental indemnities where a low probability but high impact risk is present, e.g. where part of the site was previously used as gasworks.