Subcontracting ‘Back to Back’ Agreements – What’s a back to back agreement ?

by | May 20, 2022 | Blog

Subcontracting: What is a back-to-back agreement?

The term “back-to-back agreement” is normally used to refer to a particular kind of subcontract.

The term “subcontract” normally refers to a separate contract entered into by a main contractor under which the main contractor agrees with the subcontractor that the subcontractor will perform some or all of the main contractor’s obligations under the main contract.

Subcontracts can be divided into two types:

The “stand-alone” subcontract

This is a subcontract that can be read and understood without reference to the main contract. The clauses in this sort of subcontract might have little in common with those in the main contract. For example, a subcontractor might be a subcontractor in the sense that it is approved by the ultimate customer, but the main contractor might buy subcontractor’s products subject to the subcontractor’s standard terms and conditions, or the main contractor’s standard purchase terms.

The back-to-back agreement

The expression “back-to-back agreement” is normally used when the rights and duties of the subcontractor in relation to the main contractor closely mirror those of the main contractor in relation to the customer under the main contract. This is often achieved by incorporating by reference into the back-to-back agreement all the terms of the main contract except for those parts of the main contract that are expressly excluded or varied (the most obvious being the clauses relating to price).

Steven recently prepared a back to back agreement for a provider who had secured through tender provisions of public services. The customer was thus a council. Steven’s client was providing some of the services, but certain of the services were to be supplied by so-called “Partners” or associates. A back to back agreement was created, incorporating the terms of the 100 page council contract, so that the Partners knew what they had to do. The client, as the main contractor, could then subcontract that work to the partners while ensuring they operated within the remit of the Council customer’s requirements.

Liability of Subcontractors

Under both kinds of subcontract mentioned above, the main contractor remains liable to its customer for the performance of the main contract, and so is liable to the customer under the main contract for any default in the performance by the subcontractor under the subcontract. Equally, the customer is not usually entitled to sue the subcontractor for breach of contract, as there is no direct contract between the customer and the subcontractor.

Accordingly, if the subcontractor fails to perform sufficiently, the customer could sue the main contractor who in turn would claim against the sub-contractor.

It’s therefore important to ensure that the contract with the subcontractor contains sufficient and certain obligations upon them.

If you’re looking for a subcontract, whether a full stand alone subcontract agreement or a back to back agreement, then get in touch.

0 Comments

Submit a Comment

Your email address will not be published.

× Live Chat via Whatsapp