If you’ve ever found yourself frantically flipping through a sub-contract at 6pm on a Friday wondering, “Hang on… does this clause even match what we signed with the client?” – you’re not alone.
Done right, a back-to-back setup protects your position, keeps risks where they belong, and helps avoid those awkward “who’s paying for this?” conversations down the line. Done wrong? You could be left holding the bag for someone else’s delay, defect, or dispute.
In this article, we’ll break down what back-to-back really means, where contractors often get tripped up, and how to get it right, whether you are a main contractor or a sub-contractor who is sub-sub-contracting their work.
What Is a Back-to-Back Contract?
A back-to-back contract is a sub-contract which has terms that are aligned with another contract. It is a key tool to manage commercial risk.
The idea is to make sure that what you’ve promised upstream to your client is safely passed downstream to your sub-contractors. It’s meant to keep everyone on the same page when it comes to responsibilities, deadlines, and liabilities.
Why do Back-to-Back Contracts matter?
Imagine your contract says that you have to notify your client of any delays within 7 days or you lose the right to claim extra time or money.
However, the sub-contract that you’ve signed your sub-contractor up to gives them 14 days to notify you of delays.
See the problem?
By the time your sub-contractor tells you there’s an issue, your own notification window might have already closed. You can no longer claim from your client, but you still have to deal with the delay, and now probably the costs. You have no recourse against the sub-contractor because, as far as they are concerned, they told you within 14 days and have done nothing wrong.
How to do back-to-back badly
Contractors sometimes try to make a sub-contract back-to-back by cutting and pasting their contract clauses into the sub-contract.
Sometimes, Contractors replace “contract” on the title page and replace it with “sub-contract” – and then have the sub-contractor sign up to the exact same set of terms.
Either way, the contract is going to be difficult to understand, is likely to have unintended consequences, and may expose you to more risk, not less.
What’s the best approach?
Get the obligations clear and aligned from the very start.
Different contracts from the standard form ‘families’ like JCT and NEC are designed to work with the other contracts in the same family. Their sub-contracts are structured to mirror their corresponding contracts. However, once amendments start creeping into the contract (and they almost always do), you can’t assume the standard sub-contract still does the job. Any amendments made upstream need to be carefully reflected downstream.
The only safe approach is to review the contract in detail and ensure your sub-contract properly mirrors the risks, responsibilities, and obligations you’ve taken on. That might mean dropping down specific clauses, but it also means translating them, so they make sense in the sub-contract context.
This could be a time-consuming process, but it is far less painful than trying to fix a mismatch if something goes wrong later down the line.
Can’t I just rely on an indemnity?
It’s a tempting thought: “If something goes wrong, I’ll just rely on the indemnity clause that requires the sub-contractor not to put me in breach of the contract.” Unfortunately, it’s rarely that simple, and may not be enough.
If your sub-contract doesn’t clearly pass down the relevant obligations or liabilities from the contract, your sub-contractor may have no legal duty to cover the loss. Even if you’ve included a general indemnity clause, courts tend to interpret contracts based on their actual wording. If the sub-contract’s terms are inconsistent with those of the contract, a court may not disregard the agreed terms just because they don’t match up with the contract.
Having a properly drafted indemnity clause requiring compliance with the contract is a good idea, but it should not be the last line of defence.
Which clauses do I need to look out for?
Nearly any clause could require special attention when considering whether to drop it down to your sub-contract, but these are some of the most common:
Grounds for claiming additional time and money: If the sub-contract includes grounds for claiming time and money that are not in your contract, your sub-contractor might be entitled to claims that you can’t make against your client.
- Notice requirements: It is important that for any provision that requires you to give notice within a specific time, the sub-contractor is required to give the same notice to you before you are required to give notice to your client. This is especially important for delay notices and loss and expense notices as you could be time-barred from making a claim.
- Payment applications: You want to make sure there is not a mismatch between what you are paid and what you are paying to your sub-contractors. Make sure your sub-contractors submit their payment applications to you before you have to submit your payment application to your client, and that the payment terms line up.
- Omission of work: If your client has the power to omit work from your scope, but you cannot omit it from your sub-contractor’s scope, you may have a problem.
- Termination: Are you allowed to terminate a sub-contractor if your contract is terminated? These rights need to be aligned, otherwise you risk being stuck with liabilities to the sub-contractor that your client does not have to you.
- Design Responsibility: If your contract imposes a “fitness for purpose” standard but your designer’s sub-contract just refers to “reasonable skill and care”, there is a gap, and it could be a costly one.
- Title to property: Does title to (ownership of) goods and materials pass at the same time in the contract and sub-contract?
- Third-party rights: Are you required to give collateral warranties or other third-party rights? If so, you are probably required to make sure your sub-contractors give those same third-party rights as well. You need to make sure the sub-contracts require these to be given.
How can CCC help?
CCC has decades of experience in construction adjudication, including advising parties about their contracts and how to limit and manage their risk. We can assist you with:
- Drafting contacts and sub-contracts.
- Ensuring your contracts are back-to-back.
- Advising you on any risks in your contract and helping you negotiate better terms.
- Drafting standard terms.
- Providing advice and legal support if you end up in a dispute.
