Sub-Contracts

Sub-Contracts

1. Reasons for their use

   • SMM in 1922 contained 16 different trades
     • 1988 edition contains over 300
   • Affords flexibility for the main contractors
   • Main Contractor still wholly liable to Employer
   • No privity of contract between Employer and SC
     • Note that some Employers may influence or insist on a SC

2. Liability of SC to Emploers

   • Collateral warranty
     • Shanklin Pier v. Detel Products
   • No claim in pure economic loss
     • this is no longer very clear
       • Junior Books v. Veitchi
         • sufficiently close relationship
         • The same could occur in negligent misstatement if the relationship were sufficiently proximate
           • Hedley Byrne v Heller
   • The main contractor can discharge his liability if he is careful in the selection of the SC
     • D&F Estates v. Church commissioners

3. Relationship

   • Nominated selected by the Employer
   • Domestic selected by the Contractor
     • Named SC - species of the JCT form
       • Avoids the disadvantages associated with nomination

4. Incorporation of contract terms

   • Not uncommon for their to be no Contract
     • Modern Building v. Limmer & Trinidad
       • Held that the expression on the acceptance letter meant the 'green book'
       • Although this should be contrasted where the Arbitration clause was deemed not to be included
         • T.W. Thomas v Portsea Steamship

5. Incorporation of main terms

   • Can be ambiguous if referring to the main contract
     • Geary, Walker v. Lawrence & Son
   • Delay
     • Martin Grant v. Sir Lindsay Parkinson
       • Argued that work of the SC should be free to arrange in an efficient and profitable manner

6. Dispute resolution

   • A probable inclusion although a dispute with the SC could be passed up to the Employer. These would both be heard separately
     • Tripartite arbitration

7. Name borrowing

   • Northern Regional Health Authority v. Derek Crouch Construction
     • Concerned with whether the court could open up an appeal from an Adjudicator. Held not to.
       • Although Beaufort Development v. Gilbert Ash - they can

8. Witholding payment, set off and abatement

   • Only if very cleaar
     • Beaufort Development v. Gilbert Ash
       • HGCRA
         • Section 111 notice is required
           • SL Timber systems v. Carillion Construction
         • The wide rule of the notice is held to promote cashflow
           • Pay no argue later - this has risks associated with liquidation
   • Pay when paid
     • Section 111 prohibits this
       • Midland expressway v. Carillion Construction - CAMBBA
   • Employer has control mechanisms in the JCT to prohibit the amount of works sub-let.

9. Assignment

   • Can freely assign rights unless prohibited
     • Linden Gardens v. Lanesta Sludge

10. Employer liability to SC

    • No implied right of payment for nominated SC
      • Has to be incorporated
        • JA Milestone v. Yates Castle Brewery
    • No right to direct SC