THEORY INTO PRACTICE -
PASSING ON SUPPLIER LIABILITY
Have you left yourself exposed to the performance of others!
You have secured that contract and although the Main Contractor’s Contracts Manager gave you a difficult time you have successfully negotiated all your terms and they are bound into the Construction Subcontract.
The contract is going well you are on time and within your cost budget, you have submitted all your contractual letters as detailed in Theory into Practice – Managing a Contract and you are feeling happy with yourself – what can go wrong? LOTS
Your supplier or sub-contractor is due to deliver to site or start on site next week and suddenly has a key component shortage or has double booked his labour. Just to make matters worse the Main Contractor is over budget and behind programme.
The Main Contractor is demanding you deliver or start work on site and not listening to you; worse he is threatening damages (even if you have negotiated a limitation), future business etc etc. He is under pressure from his client and looking for someone to blame.
Its not your fault your supplier has let you down and there is nothing more you could have done. WRONG!
The financial performance of your contract, your reputation, maybe even business are at risk. We have all been there. It’s not your fault your supplier has let you down there is nothing more you could have done. WRONG! You have left yourself exposed to the performance of others.
Even if the Main Contractor understands and sympathises with your position, he has no option but to seek to recover his losses from you. The Main Contractor is in contract with you he has no contractual relationship with your supplier or sub-contractor. Under the terms of any Construction Contract, you are contractually responsible for the performance of your sub-contractors. Under the terms of any Construction Contract, you are exposed to the risks of your suppliers or sub-contractors’ non-performance.
Ideally you could just copy the Construction Contract you are working under attach and reference it to you suppliers / sub-contractors order – legally that would work but in practice your supplier or sub-contractor is going to be frightened off at the sight of a 25mm thick construction contract which is clearly not relevant to their business.
There is nothing wrong with the use of generic supplier / purchaser terms provided they include the necessary clauses relating to the vagaries and demands of working in the construction industry and most importantly protect your exposure by passing on your risks and liabilities in the event of your supplier / sub-contractors non-performance.
Just as important you want to ensure your suppliers / sub-contractors are back-to-back with you in respect of payment terms, insurance, Health & Safety, quality standards of workmanship and a host of other issues. After all they are effectively part of your “team” and may be your face representing you on site – you need to be managing them and not them controlling you.
ENSURE YOU ARE NOT EXPOSED TO THE NON-PERFORMANCE OF YOUR SUPPLIERS AND SUB-CONTRACTORS WITH THE FRESH JCT THEORY INTO PRACTICE – PASSING LIABILITY TO YOUR SUPPLIERS SUITE OF DOCUMENTS AND TERMS & CONDITIONS.
The FRESH JCT team with over 30 years’ experience of providing capital M&E equipment to the construction industry dependent upon the performance of suppliers and sub-contractors are happy to review your current suppliers and sub-contractors’ terms of trading to ensure you are passing on your risk and exposure.
Alternatively, the use of the FRESH JCT Theory into Practice – Passing Liability to your supplier / subcontractor suite of documents and supplier terms used in conjunction with our other recommended documentation will give you protection from supplier / sub-contractor non-performance.