Subcontracts Flashcards
Provide reasons why the industry would choose to subcontract?
- undertake complex projects
- expertise
- reduces risk
- take on larger projects
- no long term commitment
- increased productivity
Can you describe the difference between novation, assignment and subcontracting?
Novation - contractual rights and obligations transferred from one party to another. (the burdens and benefits)
Assignment - transfers benefits of a contract e.g. right to pay
Subcontracting - carrying out work on behalf of another contractor
If the architect is novated to a contractor who subsequently goes into liquidation, can the architect be re-novated to the client?
Yes - you don’t need third party permission to be re-novated.
During the pre-tender stage, your client has requested a specific company to supply and install the specialist lift equipment for the project. This is to ensure that they are compatible with the existing equipment and can form part of the maintenance agreement with the company. Explain how the client could do this under JCT.
There is a specialist provision under JCT for the client to put forward a company. Named specialist provision & to be named in bill of quantities.
Can a contractor refuse to comply with an architects instruction which requires the acceptance of a quotation for a subcontractor chosen by the architect?
Contract has the right to ‘reasonably object’ to an instruction but this may lead to dispute. There needs to be a valid reason to object.
If the contractor does not follow instructions then the architect may be required to issue a ‘notice to comply’.
If the contractor is in financial trouble, can the employer pay the subcontractor directly?
No, because the contract is between the main contractor and sub contractor.
The contractor has gone into liquidation and the heating subcontractor say 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 piping - if the employer has paid for it, they are then the property of the employer and they have the right to remove them.
Radiators - No, you cannot take anything which is fixed to the building as this is no property of the land owner and can be seen as criminal damage.
Is the subcontractor obliged to work in accordance with the actual progress of the main contractors work?
Yes, unless otherwise agreed with the main contractor - this would need to be stated in the contract, otherwise it just states that a reasonable amount of work is desirable (JCT).
Can there be liquidated damages in a subcontract, and would you advise the use of liquidated damages within the subcontract?
There can be, although we would advise other ways as pinpointing one subcontractor to blame can be tricky.
Otherwise include;
-pre-agreed charge in the contract, so if the contractor does not complete on time they can deduct the charge from payment.
-unliquidated damages - have to go to court and prove the losses the contractor has faced.
-divide the damages between a number of subcontractors
If the contractor engages a subcontractor without the architects consent, can the contractor avoid having to pay the subcontractor for work done?
No, the payment provision is between the contractor and architect and you would be subcontracting without consent. Main contractor would have to get the architects consent.
A contract would need to be put in place.
Under the NEC4 form of contract, what would the contractor need to do before subcontracting out substantial parts of the works?
Get consent and permission from the project manager, and would need to know;
- name of company
- terms and conditions they are signing up to
If the architect instructs the contractor to accept a specific sc quote - is the employer liable if the contractor fails to pay?
No way would the employer bypass a main contractor to pay architect or subcontractor.
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?
Yes - reasonable objection.
They would have to choose another named specialist, do the work themselves (get contractors to do it), or omit the work.
Discuss the options available to your client when it has been discovered that the subcontractors design work is deemed defective?
It is the main contractors liability to put it right as subcontractor has contract with the main contractor.
If the employer wished to bring directly employed contractors to site to carry out special work, can the contractor refuse admittance?
Yes but they would normally let them do their work by agreement.
