Agreement Back To Back
The principal contractors should obtain the consent of the client to hire subcontractors before attempting to enter into back-to-back contracts. Under the contract itself, the principal contractors should cede responsibility for their share of the work to the contractor. 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. 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). 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. The first approach is often seen by contractors as the simplest and therefore most cost-effective way to reduce debt.
But without careful attention, such an approach can often create difficulties. Particular caution should be exercised when developing back-to-back provisions. For example, a general provision that all references to the main contract to the „employer” and „principal contractor” in the subcontract must be read as references to the „primary contractor” or „subcontractor” cannot be adapted to any obligation and lead to the cancellation or interpretation of a substantial duration of the contract. In addition, where there are long and detailed key contractual specifications (often in the form of employer requirements), it can be a very complex and even controversial task to separate the obligations that are relevant to each subcontractor; the main concern of subcontractors is that they unintentionally take the risk of dealing with inappropriate situations given the size and extent of their respective subcontracting. For back-to-back contracts to work effectively, senior contractors and subcontractors must be aware that, in the construction sector, it is customary for the prime contractor to be required to use the services of a subcontractor to carry out all or part of a specific project for a client. The client generally requires that the client be responsible for the entire work of the project. To protect their liability, the prime contractor will often try to make the subcontractor legally responsible for as much of the project as possible. Essentially, it is a back-to-back contract that is always standardist when a project requires the collaboration of several different entities to finalize the entire work. The common problems and risks of a back-to-back agreement depend on whether you are the primary contractor or a subcontractor.