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Back to back Contract

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Angus Duncan
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Hi,

Can anyone explain simply to me "exactly" what a back-to-back contract is. I hear this term bandied about all the time, but do not have a clear definition of what it is.

Thanks.

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Tim Tam
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Hi, I agree with you but they still are active around

Hi Tim

Someone has signed up to a sub-contract where they have no idea as to the quality standards and an open ended LAD commitment.

Such people have no right to stay in business.

Best regards

Mike Testro

Tim Tam
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Hi, Yes , is a lesson learnt for us and we are not paying attention to contract. But the practicability is not there with the content.

Hi Tim

The main rule is read everything before you sign it.

Don't complain afterwards.

Best regards

Mike Testro

Tim Tam
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Hi I have a query on the term back to back contract. I am the sub contractor and I have a back to back contract with the main con. Firstly it is very unfair in my opinion, some of the clause and condition are not in my sub contract but is in the main contract tender document. There s a statement that says that the sub con can go to the main con office to read and inspect their contract. It turns out that there a a statement that says the quality should benchmark against this particular project by the developer. Firstly who will go and spend time in main contract office to inspect the document which is close to 600 pages. And who knows the quality and standard that we are suppose to benchmark against . We are not even involved in that project in the first place. Secondly my contract has no cap to LD . Would that means the main con can pass full LD to me if we are the reason for delay , even if the sum is more than 10% of my contract value ?
Sasidharan Menon
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The main purpose of a Back to Back contract is to ensure that the main contract in its real real sense is implemented thru a subcontractor. In other words the the Contractor does not want to give a chance to the subcontractor to slip away from the responsibilities and more over the responsibilities are shared equally. In a back to back contract the issue is mostly related to warrantees/Guarantees, LD due to delays etc where in normal case the subcontractor  always escape without a penny lost from his pocket and the Contractor has to bear the brunt. However, in a back to back case the subcontractor is not relieved of his responsibilities and shall have to full fill his obligations.

Shahzad Munawar
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Back to Back Contract means the implementation of Main Contract provisions to Subcontractor as it is.

Shahzad Munawar
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Back to Back Contract means the implementation of Main Contract provisions to Subcontrcat as it is.
Joe Mansour
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Hello,

Though I couldn’t find any contract form defining the back to back concept, I think what the main contractor has in mind when including this term in a contract is shifting all his rsponsibilities to the subcontractor. But I think it also means that the main contractor undertakes to pursue all the subcontractor’s claims towards the owner, and this is where the problems arise, because the main contractor has other global considerations for the project when dealing with the owner, unlike the subcontractor who has only his scope of works.
I think back to back should work in both direction to be fair.
I was involved once in a project where the MEP subcontractor (on a back to back contract)had claims amounting to 2 millions dollars. In view of the very powerful owner the main contractor was dealing with, he preferred at the completion of the works to make a settlement with the owner (with some sacrifice), despite the subcontractor’s rejection to such settlement. The main contractor and his sub are now in the process of arbitration.
This is a very dangerous situation, and I advise all subs to be alert to the possibility of reaching such a situation.

Joe
Angus Duncan
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Thankyou very much for your replies - things are much clearer now.

Cheers,
Angus.
Stuart Ness
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Angus,
A "back to back" Contract is one in which the rights and obligations of a (usually) Main Contractor are entirely passed down to a Sub-Contractor, who will actually carry out the work (and carry the can when things go wrong).
One of the problems in such Contracts, however, often relates to the payments terms, which may be "paid when paid" - in other words, the Subcontractor does not get any payment until some time after the Main Contractor has been paid. This can be a very very long time......
Problems also arise with regard to some issues, such as insurances, where more than 1 Subcontractor has been engaged on a back-to-back basis. And if bonus payments are involved, it can be a bit of a nightmare.
Stuart
www.rosmartin.com
David Barry
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It simply means that you ensure that your responsibilites under one contract (usually to an Employer/Client) are passed through to another contract (usually to a sub-contractor).

A simple example pertaining to delay would be where a main contract has a provision for Liquidated Damages of £10,000 per week of delay, and the contractor passes on this provision to a sub-contractor (i.e. back to back).

Regards
David
www.preceptpm.co.uk