Back-to-back provisions in construction contacts

[edit] Outline

The term ‘back-to-back’ refers to the replication of contractual terms through the supply chain.

As contractors increasingly sub-contract much of their work to others, so the construction supply chain has become longer and more complex. It is important for all parties to ensure that certain rights and obligations exist not only in their own agreements, but also in the agreements contracting parties have with others. This ensures that the main contractor is not left responsible for all obligations to the employer, that sub-contractors have enforceable rights and that timings are co-ordinated throughout the supply chain.

Typically, descriptions of back-to-back requirements focus on the relationship between the employer, contractor and sub-contractors, but they apply equally to sub-sub-contractors, suppliers, consultants and sub-consultants.

In its strictest form, back-to-back refers not just to the replication of contractual rights and obligations in different levels of contract, but to a requirement that the terms of agreement at one level are included in agreements at lower levels.

This is a very complex process that requires careful consideration and drafting ­to ensure the correct terms - and only those terms - are passed on, that they are phrased appropriately and that requirements, and in particular timings, are properly co-ordinated.

[edit] Back-to-back provisions can be created by:

• Including reference to terms in the main contract to be included, excluded or varied in a sub-contract. This requires very careful checking as it can be difficult to identify every clause that is relevant and it results in a need to cross-reference between agreements; it also requires that sub-contractors have access to higher tier contracts.
• Drafting bespoke sub-contracts that reflect the rights and obligations in the main contract. While the end result is neater and simpler to understand than referencing, equal care needs to be taken in drafting.
• Using standard form contracts that already include back-to-back provisions in main contracts and sub-contracts.

[edit] Key aspects of construction contracts that might require back-to-back provisions include:

• Key dates, notification periods and other time-related procedures. For example, claims can fail if the timing of the sub-contract claims procedure does not give the main contractor sufficient time to make a claim themselves.
• Enforcement of dispute resolution findings and the right to participate in proceedings.
• A requirement that valid claims must be passed on.
• Allocation of liability for liquidated damages.
• Entitlement to extensions of time.
• Entitlement to loss and expense.
• Information and reporting requirements.
• The definition of completion.
• Obligations to achieve a certain quality and to comply with certain standards.
• Indemnities.
• Collateral warranties.
• Suspension and termination rights.
• Design responsibilities.
• Transfer of copyright.

[edit] End note

The Housing Grants Construction and Regeneration Act prevents the inclusion of pay-when-paid or pay-when-certified clauses, and the release of retention (i.e retention monies) cannot be prevented by conditions within another contract.

[edit] Related articles on Designing Buildings Wiki

• Building Users' Insurance Against Latent Defects.
• Collateral warranties.
• Concession Contracts Regulations.
• Construction contracts.
• Contra charges.
• Housing Grants Construction and Regeneration Act.
• Liberty Mercian Limited v Cuddy Civil Engineering Limited and others.
• Proprietary information.
• Sub-consultants.
• Sub-contracts.
• Z clauses.