However, a prime contractor usually can`t do the work alone – they can hire multiple subcontractors to provide support. In this case, they want to ensure that there are consecutive provisions so that they are not directly liable to the customer for the work performed by a subcontractor. As such, they ensure that their construction contract with the subcontractor reflects their contract with the customer. The main conditions that are usually affected are the obligations of the prime contractor, including: One issue that was raised several times during my assignment was the « back to back » principle in the design of subcontracts. To incorporate the terms of the main contract into consecutive contracts (subcontractors), copy the applicable terms into the new contracts. Be sure to exclude any conditions that do not apply, such as .B. the total cost of the contract or other clauses relate only to the prime 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. Provisions relating to the duration and termination of a consecutive agreement may also reflect the main contract, so that when the main contract ends, the consecutive agreement also terminates. The parties may wish to ensure that they can withdraw from a consecutive agreement in writing for the same reasons as the main agreement or for certain other reasons (for example.B. the subcontractor may attempt to negotiate a clause allowing it to terminate the subcontract if the contractor fails to fulfil a material obligation under the main contract). Of course, there are other ways to close contracts throughout a supply chain, including independent subcontracts.
Stand-alone subcontracts are commercial agreements that do not contain any clause in the main contract and may be used if Party A wishes to include additional rights or obligations in Part B`s subcontract or deviate from the provisions set out in the main contract. For example, a prime contractor may want to set deadlines for the subcontractor that are earlier than the deadlines set by the employer so that the prime contractor has some space if the subcontractor is late or if the subcontractor`s work needs to be corrected. In the construction industry, it is common for the prime contractor to use the services of a subcontractor to carry out all or part of a particular project for a client. The client generally requires the prime contractor to be responsible for the entire scope of the project work. To protect its liability, the prime contractor will often try to hold the subcontractor legally responsible for as much of the project as possible. Essentially, this is a consecutive contract that is increasingly becoming the norm when a project requires several different companies to work together to complete the full scope of the work. Consecutive agreements are commercial subcontracts that reflect all or part of the terms of a master contract further up the contract supply chain. The way consecutive agreements work is to pass on the same rights and obligations from one party to another, so that the people who perform the work or provide services are responsible for any breach of traditional obligations, rather than the « intermediate » level or the level (in complex agreements, there may be more than one subcontractor) of the supply chain. It effectively fills liability gaps in the contract chain. A consecutive contract works best when there is a prime contractor and only one or two subcontractors and responsibilities cannot (all) be clearly separated from each other.
If there are too many parties, the structure can become too complex. With responsibilities that can all be clearly defined and are not interdependent, you can stick to normal agreements. When drafting or reviewing consecutive contracts, be sure to carefully review each contractual clause. Some of the elements that could be particularly important include: 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. 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.
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