Stand-alone contracts contain all the terms of the original contract that are relevant to the subcontract. Such a contract can eliminate cumbersome cross-references, inaccuracies and inconsistencies. However, drafting a stand-alone contract can be even more time-consuming than drafting a consecutive contract, as each party must review the agreements and decide which terms to include in the subcontract and which terms to change. In response to industry demand, FIDIC is currently preparing a subcontract for the construction of construction and engineering work to be used by the employer for subcontracting which will be accompanied by fidic 1999 red1 and pink2 books. In November 2009, FIDIC published a test edition of the subcontract for comment. The test edition is largely well formulated, but some of the transmission provisions could be revised in the final version, which is expected to be published for use this year. The dispute resolution clauses of the test edition attempt to resolve the three issues mentioned above, but unfortunately they are somewhat lacking and involve significant risks for both the prime contractor and the subcontractor. Again, it is to be hoped that these issues will be resolved in the final version. For a more detailed comment on the FIDIC test subcontract, please click here. The first approach is often seen by entrepreneurs as the simplest and therefore most cost-effective way to pass on responsibilities. However, without special attention, such an approach can often lead to difficulties. Particular attention should be paid when drawing up the consequential provisions. For example, a general provision that all references in the main contract to the “employer” and the “prime contractor” in the subcontract are to be understood as references to the “prime contractor” and the “subcontractor” respectively may not be appropriate for an obligation and could result in the invalidity of an essential provision of the contract or be subject to an interpretation that was never intended.
In addition, with long and detailed contractual specifications (often in the form of employer requirements), it can be very complex and even contentious to separate the relevant obligations for each individual subcontract. The biggest concern of suppliers is that they inadvertently take the risk for inappropriate matters given the size and scope of their respective subcontracts. Under English law, a back-to-back contract that contains clauses by reference cannot contain certain types of clauses from the main contract to the subcontract. For these clauses, you may need to include a language in the subcontract that expresses the desired terms of the main contract, rather than relying on a standard general inclusion clause by reference. Other local and international laws may also prohibit the inclusion of certain regulations. The prime contractor does not want to be solely responsible for all the elements of the project. Therefore, they will try to pass on their obligations and responsibilities to the developer through their subcontractors. This allows the prime contractor to limit its exposure to potentially risky bonds. To do this, they use consecutive contracts with their subcontractors. So there are clear benefits for entrepreneurs to implement consecutive agreements. In practice, however, drafting consecutive agreements can be a difficult task. When drafting or reviewing consecutive contracts, be sure to carefully review each contractual clause.
Elements that could be particularly important include: Incorporate the main contractual conditions into consecutive contracts (subcontractors), copy the applicable conditions into new contracts. Be sure to exclude any conditions that do not apply, such as . B the total cost of the contract or other clauses which concern only the main contractor. This method of creating consecutive contracts may seem simple and effective, but it can sometimes be more difficult than drafting a stand-alone contract. In everyday language, “back to back” means that each document contains the same terms and characteristics as the next contract. You can open a consecutive letter of credit that contains the same items as the previous one. In residential development, the term could refer to houses built side by side. In a consecutive system, a dispute between the prime contractor and the employer can have a significant impact on the relationship between the prime contractor and the subcontractor, and vice versa.
Consecutive agreements, whereby a prime contractor attempts to pass on its obligations and responsibilities to the employer to its subcontractors, are becoming an increasingly common feature of construction projects. While they can be a practical way to transfer risks and obligations through the chain of responsibility, inadequate wording can lead to particularly complex and difficult disputes. Generally speaking, there are two ways of structuring consecutive subcontracts: a common feature of consecutive contracts is the provision that payment to the subcontractor is subject to receipt of payment by the prime contractor under the main contract. However, such “payment at the time of payment” clauses are not enforceable in construction contracts under the laws of certain jurisdictions, including England and Wales and Singapore. Sometimes a “pay-for-certification” clause is considered an appropriate compromise, unless it is also prohibited in the relevant jurisdictions, as will soon be the case in England and Wales. Even if such clauses are not prohibited by applicable law, they are often rejected by subcontractors who expect to be paid once they have properly fulfilled their obligations under the subcontract, regardless of the position higher up the chain. A consecutive contract can refer to many different things, but it is most often used in construction. Read 3 min Consecutive construction contracts are quite common, especially for large projects. Large international projects usually require the cooperation of many participants.
Each of these participants has a different ability to contribute to different aspects of the project. There is no one-size-fits-all solution to the various potential pitfalls associated with consecutive contracts. Regardless of the approach taken to designing consecutive contracts, the decision should never be made with the intention of shortening a necessarily rigorous design process. .
