Subcontractor agreements (subcontracts) are often intended to be back-to-back with the main contract but this can lead to ambiguity and inconsistency for a subcontractor.
What happens when the contractor’s works contract sets out a higher quality standard than that in the subcontractor’s contract?
Back-to-Back
Many subcontracts include clunky attempts to pass on the contractor’s own obligations without setting them out in full.
A recent case reviewed the obligations of a subcontractor relating to the quality of the completed works. The subcontractor’s agreement stated:
- the subcontractor had notice of the material provisions of the main contract
- the subcontractor had to complete the subcontract works so that no act or omission or default of the subcontractor in relation to the subcontract works shall constitute cause or contribute to any breach by the contractor of any of its obligations under the main contract [except where the subcontract otherwise provided]
- the subcontractor would use reasonable skill and care in designing the subcontract works.
The main contract set out a strict obligation (ie not subject to using reasonable skill and care) to comply with all statutory requirements including building regulations.
The court held that the commercial intention of the parties was to make the subcontract back-to-back with the main design and build contract. The requirement under the subcontract to use reasonable skill and care cannot qualify the strict obligation under the main contract – as it would make the more onerous obligation redundant.
Accordingly, the subcontractor was required to strictly comply with the Building Regulations.
What should you do?
As a contractor: ensure your subcontractor really understands the quality requirements of your own contract – it is better for the subcontract to be really clear, than woolyy. It is far better to have the quality standard your client wants than to rely on your right to sue for defects.
As a subcontractor: review the main contract documents carefully so you really understand your obligations on quality. The difference between reasonable skill and care and fitness forpurpose can be very expensive (£21m in the case referred to!).
Case: LDC (Portfolio One) Limited v George Downing Construction Limited, European Sheeting Limited (In Liquidation) [2022] EWHC 3356
