The subcontract binds me to a main contract I've never seen
The subcontract says we take on the main contractor's duties to its client for our work, and nobody has sent us the main contract.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
What's happening?
A back-to-back subcontract passes the main contract's terms down to you. It usually does this with a clause saying you are bound by the main contract so far as it relates to your work. Many add that you must not put your main contractor in breach of it. The main contract then becomes part of your deal, often without a copy ever reaching you.
The terms that come down this way are the ones you cannot price without seeing them. They include the notice periods, the delay damages the client can charge, the design and warranty duties, and the programme. Your main contractor will want notices from you sooner than its client wants them from it. So a 14 day notice period in the main contract can leave you 5 days in the subcontract.
Whether a general clause like this brings in every term of the main contract, or only some, depends on its wording. That is a question for your solicitor. The commercial risk is plain: sign without reading the main contract, and you may have agreed to terms you never priced.
The solution
Ask for a copy of the main contract before you sign, with the prices blacked out if your main contractor prefers. Read the parts that reach your work: notices, programme, delay damages, design, warranties and insurance. Set each against what your subcontract gives you. You should not have less time, or more liability, than your main contractor has itself.
Pre-Signing Contract Review reads your subcontract together with the main contract terms it passes down. We find the terms that move money or risk onto you and rate what each could cost. Then we write the amendments to ask for and set out what to price in.
Example
Illustrative example. The scenario and figures are invented.
The facts
A roofing subcontractor is offered a £640,000 subcontract that binds it to the main contract so far as it relates to the roofing. Nobody has sent it the main contract.
What happens
- The roofer asks for the main contract before signing. It arrives with the prices blacked out.
- It gives the main contractor 14 days to notify its client of a delay. The subcontract, read with it, gives the roofer 5.
- It carries delay damages of £12,000 a week, which the subcontract passes down in full with no cap.
- It requires a collateral warranty to the client's funder, a direct promise to the funder about the roofing. The roofer's insurer has not been told about it.
- The roofer sends back proposed wording. It asks for 10 days for notices and delay damages capped at 10 per cent of the subcontract sum. It also asks for the form of warranty to be attached to the subcontract.
What the main contract passed down
| Term | Main contract | Subcontract as offered |
|---|---|---|
| Delay notice period | 14 days | 5 days |
| Delay damages | £12,000 a week | £12,000 a week, no cap |
| Collateral warranty to the funder | Required | Required, by reference only |
The outcome
The roofer signs with 10 days for notices and delay damages capped at £64,000. Its insurer confirms the warranty before work starts.