Contractual chain - Revision history

Designing Buildings at 07:26, 15 February 2021

2021-02-15T07:26:55Z

← Older revision		Revision as of 07:26, 15 February 2021
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	* Supply chain.		* Supply chain.

−	[[Category:Contracts_/_payment]]	+	[[Category:DCN_Definition]] [[Category:DCN_Guidance]] [[Category:Contracts_/_payment]]

Designing Buildings at 11:26, 3 January 2020

2020-01-03T11:26:33Z

← Older revision		Revision as of 11:26, 3 January 2020
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	= Related articles on Designing Buildings Wiki =		= Related articles on Designing Buildings Wiki =

		+	* Collateral warranty.
	* Construction contract.		* Construction contract.
	* Contract claims in construction.		* Contract claims in construction.

Designing Buildings at 11:25, 3 January 2020

2020-01-03T11:25:58Z

← Older revision		Revision as of 11:25, 3 January 2020
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−	It is common practice on construction projects to have ~~two sets~~ of parallel contractual arrangements in place. On the one hand there is the main contract between the employer (client) and the main contractor; on the other hand, there is the sub-contract between the main contractor and the sub-contractor or sub-contractors. Each of these contractual arrangements is regarded as a link in the overall contractual chain.	+	It is common practice on construction projects to have more than one set of parallel contractual arrangements in place. On the one hand there is the main contract between the employer (client) and the main contractor; on the other hand, there is the sub-contract between the main contractor and the sub-contractor or sub-contractors. Each of these contractual arrangements is regarded as a link in the overall contractual chain.

	One of the features of the contractual chain is the privity of contract. This means that the rights and obligations contained in the contract apply only to those who are a party to it. So, the main contract between the client and main contractor does not involve the sub-contractor who is therefore not liable contractually to the client for any actual breach of contract. The subcontractor therefore cannot claim against the client for say, poor working conditions or for retention monies held by the main contractor which have yet to be received. The sub-contractor must claim against the main contractor.		One of the features of the contractual chain is the privity of contract. This means that the rights and obligations contained in the contract apply only to those who are a party to it. So, the main contract between the client and main contractor does not involve the sub-contractor who is therefore not liable contractually to the client for any actual breach of contract. The subcontractor therefore cannot claim against the client for say, poor working conditions or for retention monies held by the main contractor which have yet to be received. The sub-contractor must claim against the main contractor.
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	Problems can arise where the chain involves a weak link. For example, if the terms of the main contract and the sub-contract are not comparable, are incompatible or are just different, relying on the chain of liability could be problematic. There may be a break in the chain which would see the sub-contractor unable to recover any payments or compensation which are rightly due.		Problems can arise where the chain involves a weak link. For example, if the terms of the main contract and the sub-contract are not comparable, are incompatible or are just different, relying on the chain of liability could be problematic. There may be a break in the chain which would see the sub-contractor unable to recover any payments or compensation which are rightly due.
		+
		+	On large or complex projects, responsibility and performance generally cascades down the supply chain to a plethora of suppliers, some of whom may be entirely unknown to management at the top of the chain.
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		+	For more information see: Supplier and Supply chain.
		+
		+	NB Collateral warranties are agreements which are associated with another 'primary' contract. They provide for a duty of care to be extended by one of the contracting parties to a third party who is not party to the original contract. A typical example would be where an architect of a development owes a duty of care to an occupier of the development in so far as any subsequent defects which may arise are concerned. Privity of contract rules would prevent any liability arising between the architect and occupier without the existence of a collateral warranty.
		+
		+	For more information see: Collateral warranty.

	= Related articles on Designing Buildings Wiki =		= Related articles on Designing Buildings Wiki =

−	* Certificate of non completion	+	* Construction contract.
−	* Compensation event	+	* Contract claims in construction.
−	* Completion date in construction contracts	+	* Damages in construction contracts.
−	* Concurrent delay	+	* Liquidated v unliquidated damages.
−	* Construction contract	+	* Loss and expense.
−	* Contract claims in construction	+	* Privity of contract.
−	* Damages in construction contracts	+	* Supplier.
−	* Defects liability period DLP	+	* Supply chain.
−	* Delay damages	+
−	* Delays on construction projects	+
−	* Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd	+
−	* Extension of time EOT in construction contracts	+
−	* Liquidated v unliquidated damages	+
−	* Loss and expense	+
−	* ~~Measure~~ of ~~damages for construction contracts~~	+
−	* ~~Octoesse LLP v Trak Special Projects Ltd~~	+
−	* Partial possession of the site by the client	+
−	* Penalty.	+
−	* ~~Practical completion~~	+
−	* Reasonable time.	+
−	* Relevant event	+
−	* Retention in construction contracts	+
−	* Sectional completion in construction contracts	+
−	* The distinction between liquidated damages clauses and penalty clauses	+
−	* Unliquidated damages	+
−	* Variations in construction contracts	+

	[[Category:Contracts_/_payment]]		[[Category:Contracts_/_payment]]

Editor: Created page with "It is common practice on construction projects to have two sets of parallel contractual arrangements in place. On the one hand there is the main contract between the employer (cl..."

2019-12-02T17:22:54Z

Created page with "It is common practice on construction projects to have two sets of parallel contractual arrangements in place. On the one hand there is the main contract between the employer (cl..."

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It is common practice on construction projects to have two sets of parallel contractual arrangements in place. On the one hand there is the main contract between the employer (client) and the main contractor; on the other hand, there is the sub-contract between the main contractor and the sub-contractor or sub-contractors. Each of these contractual arrangements is regarded as a link in the overall contractual chain.

One of the features of the contractual chain is the privity of contract. This means that the rights and obligations contained in the contract apply only to those who are a party to it. So, the main contract between the client and main contractor does not involve the sub-contractor who is therefore not liable contractually to the client for any actual breach of contract. The subcontractor therefore cannot claim against the client for say, poor working conditions or for retention monies held by the main contractor which have yet to be received. The sub-contractor must claim against the main contractor.

Likewise, the sub-contract between the main contractor and the sub-contractor does not involve the client. If the client wishes to claim against the sub-contractor, whether for the latter committing breach of contract or for defective work, the claim must be redressed by the main contractor. In such cases, the sub-contractor is liable to the main contractor.

There is usually no privity of contract between the client and the sub-contractor (whether nominated or domestic). So, for whatever breach of contract, fault or misdemeanour, the sub-contractor is not usually liable to the client. Which means the client cannot claim against the sub-contractor but must recover any due costs from the main contractor (with whom they have privity of contract). The main contractor in turn recovers the costs from the sub-contractor. This amounts to a chain of liability, where recovering costs requires either going up or down the contractual chain.

Problems can arise where the chain involves a weak link. For example, if the terms of the main contract and the sub-contract are not comparable, are incompatible or are just different, relying on the chain of liability could be problematic. There may be a break in the chain which would see the sub-contractor unable to recover any payments or compensation which are rightly due.

= Related articles on Designing Buildings Wiki =

* Certificate of non completion
* Compensation event
* Completion date in construction contracts
* Concurrent delay
* Construction contract
* Contract claims in construction
* Damages in construction contracts
* Defects liability period DLP
* Delay damages
* Delays on construction projects
* Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd
* Extension of time EOT in construction contracts
* Liquidated v unliquidated damages
* Loss and expense
* Measure of damages for construction contracts
* Octoesse LLP v Trak Special Projects Ltd
* Partial possession of the site by the client
* Penalty.
* Practical completion
* Reasonable time.
* Relevant event
* Retention in construction contracts
* Sectional completion in construction contracts
* The distinction between liquidated damages clauses and penalty clauses
* Unliquidated damages
* Variations in construction contracts

[[Category:Contracts_/_payment]]