08 Apr Back To Back Agreement
The provisions relating to the duration and termination of a back-to-back agreement may also reflect the main contract, so that when the main contract ends, the return-back contract ends. Parties can ensure that they can, for the same reasons as the main agreement or for other reasons, withdraw from a written notification of a back-to-back agreement (for example. B the subcontractor may attempt to negotiate a clause allowing it to terminate the subcontract if the contractor does not meet a substantial obligation of the main contract). Overall, there are two ways of structuring subcontractors: there was no agreement between the contractor and the subcontractor in a construction project dispute, which was examined by the courts at the end of June 2016, but the Court found that, in practice, the parties acted as if there was a “back-to-back” clause and that the original agreement did not only , but acted directly towards the subcontractor. approve the work. The Court found that the payment to the subcontractor depended on the receipt of the payment by the ordermaster. Back-to-back payments are used to agree that the subcontractor will only be paid directly after the client has paid the principal. With these back-to-back payments, the subcontractor feels not only responsible for his task, but also for the entire project. Depending on the sector, there may be legislation that determines what can or cannot be included in a “return to competition” contract, that .B. in the construction industry. B, for example, in the construction sector, the Housing Grants, Construction and Regeneration Act 1996 stipulates that a provision that subordinates payment under a construction contract to payment to the payer is inoperative (unless there is, that third party or any other person whose payment is (directly or indirectly) a condition of payment from that third party is insolvent).
For many construction projects, the contractor enters into a contract with a contractor for all the work and the contractor then enters into subcontracts for part of the work. The subcontractor`s agreements often contain a back-to-back clause. The importance of a “back-to-back” clause is that the agreement between the principal contractor and the subcontractor depends on the agreement between the initial customer and the principal contractor and that, as a general rule, the original client is the only one to confirm the work and that the payment and payment of the principal contractor to the subcontractor depend on the receipt of the payment by the principal contractor. In the case of a back-to-back system, a dispute between the employment master and the employer should have a significant impact on the relationship between the principal contractor and the subcontractor, and vice versa. The common problems and risks of a back-to-back agreement depend on whether you are the primary contractor or a subcontractor. The client has entered into a contract or project contract with the principal contractor who acquires part of the subcontractor`s business. In particular, the subcontractor respects the scope, planning and other conditions of the project contract between the client and the principal contractor. In general, there are important provisions of a principal contract that a party wishes to include in a return agreement, including data and delivery items (including reports), termination times and obligations related to the provision of goods or services or the dates of application of claims arising from the main contract. One of the common features of back-to-back contracts is that payment to the subcontractor is conditional on the principal contractor`s acquisition of the payment under the main contract.
However, these “pay when paid” clauses do not apply in construction contracts under the laws of certain legal orders, including England and Wales and Singapore. Sometimes a “pay when certified” clause is considered an appropriate compromise if it is not also prohibited in the corresponding legal systems, as will soon be the case in England and Wales.