Reasons for subcontracting
- Specialty work
- less employees for the contractor (training, pensions, redundancy, and sick pay)
- Organisational flexibility
Who does most of the actual work?
Sub contractors
Define Vicarious performance
The contractual obligations of the contractor are performed by subcontractors
3 Legal Basis of sub contracting
- Novation
- Assignment
- Vicarious Performance
Outline Novation
Contractors cannot use subcontractors without the consent of the client
Rights and obligations are transfered to the subcontractors as well (Access to site)
The new contract replaces the old one
Outline assignment
Only contractual rights are tranfered
Might be useful when selling a property
Must have written consent
Define assignment
the passing of property from one party to another - the third party
What are burdens?
Burdens are duties obligations of a contract.
What must the burdens not?
They cannot be assigned without the contractors consent
Two forms of benefit
- the right to future performance, such as completed work
- rights which have already accrued to a party under contract, such as being paid
What is a named subcontractor
A subcontractor wanted by the client. This has to be complied with by the main contractor
How can employer remain in control?
By providing a list of subcontractors that the main contractor has to choose from
How is the employer protected with subcontracting?
Once named, the employer has no liability to the main contractor for the actions of the named sub-contractor
NEC Clause 26
Makes the contractor wholly responsible for the performance of the contract whether or not they sub contract any of the works and so the contractor is responsible for providing the works as if he had not sub-let
Under cl26, sub cons … and … are treated…
Sub contractors equipment and employees are treated as if they were the contractors
Under cl26, sub contractors are to be… by the … prior to…
Sub contractors are to be approved by the project manager prior to appointment
Default of the subcontractor
- Liable to the main contractor
- DSCs cannot be liable to the employer due to privity of contract,
->Equally the employer cannot sue for breach of sub-contract as they are not involved with that contract
Rights of subcontractors to main contractor
- A right to payment
- A right to expressed terms
- A right to Implied terms, by the courts
Rights of sub con to client
- Payment
Materials
Retention of title
