Sub Contracting Flashcards
Provide reasons why the industry would choose to subcontract
To get a specialist to carry out works MC couldn’t do
Reduces as they can be removed and replaced if underperform instead of having 1 contractor doing it all
Control costs – pay on a per project basis – allows for peaks and troughs of economy too so just get them when needed
Enables a competitive industry/price/quality/innovation – lots of similar sub-contractors competing
Can you describe the difference between Novation, Assignment and Sub-contracting?
Novation - where one party transfers all its obligations and rights under a contract to a third party, with the consent of his original counterparty
Assignment - when one party to an existing contract hands off the contract’s obligations and benefits to another party
i. keep performing your obligations under the contract but give some rights to a third party.
Sub-Contracting - outsourcing, part of the obligations and tasks under a contract to another party known as a subcontractor
If the contractor is in financial trouble, can the employer pay the sub-contractor directly?
Stick to contract terms as you wouldn’t know exactly what has been paid and what hasn’t, reasons for this etc – contract is between MC and SC (Emp no involvement) – if administrators come in to take over they will have strict rules on what can be done
If a subcontractor has been selected via the Named Specialist route under JCT 2016, can the contractor refuse to use them? What would be the outcome of this decision?
NCR - Nothing to do with provisions under main contract, employer brings in own ‘specialist’ to do work
Yes can refuse for health and safety reasons and also the additional costs/time implications on programme for contractor
Can there be liquidated damages in a subcontract, and would you advise the use of liquidated damages within the subcontract?
LD’s - MC failing to achieve practical completion by the completion date
Yes there can be LD’s in a sub contract, need to prove sub-contractor was cause of the delay as MC is liable for SC performance
i. Issue is lots of subbies on site so it is hard to pin point exactly who was at fault
MC in delay getting damages taken from Emp, could pro rata cost of sub contactors that are at faut on their role in delay
Is the sub-contractor obliged to work in accordance with the actual progress of the main contractor’s Works?
Only if the program becomes a contract document – an instruction to work differently would be classed as a variation in the contract – otherwise they aren’t obliged
If its not a CD, SC can carry out work as they are required to (agreement may say as long as it is done by a date, up to them when they do it)
If want SC to be tied into main programme, need to specify as an express term in subcontract agreement
The contractor has gone into liquidation and the heating sub-contractor says it is going to remove all the loose piping stored on site and take away the radiators fixed in the building. Can it do that?
Loose items – unsure if they are paid for and if they aren’t paid for, the supplier can claim retention of title (where they still own them until they are fully paid for) – if employers has paid for them, their property
Fixed – once item is fixed, under law it is employer item, so it is criminal offence to remove
Once gone into liquidation, nothing can be removed without consent of CA
