Sub-contract claims - Building Contract Claims - page 482

Employer' under the terms of clause 7 of the main contract' 701 . This clause
obliges the contractor to 'recover for the sub-contractor' any 'damage, loss
or expense suffered or incurred' by the latter 'by reason of such disruption
or delay to the Sub-Contract Works', i.e. the main contractor must pass on
the sub-contractor's claims. This is subject to the overall proviso (which is a
condition precedent) that the sub-contractor shall have given the main
contractor the requisite notices etc. under clause 9.1. In simple terms, the
sub-contractor provides details of his claim to the main contractor who then
passes them on to the employer under the main contract terms.
Clause 9.3 deals with settlement of claims, and the vague wording is to be
deprecated. In short, the contractor is to pay over to the sub-contractor such
proportion (if any) of any monies which he recovers under the main contract
claims provisions 'as may, in the Contractor's opinion, be fair and reason-
able'; the contractor's opinion would be something which could be chal-
lenged in adjudication, arbitration or litigation. It is arguable that this
provision is caught under the Housing Grants, Construction and Regener-
ation Act 1996 as being essentially a pay-when-paid provision.
Clause 9.4 deals with claims by the sub-contractor against the main
contractor and is concerned with claims which the main contractor cannot
pass on to the employer. The contractor's instructions are dealt with separ-
ately in clause 5, which is in almost identical terms to the corresponding
main contract provision, clause 8. Apart from the contractor's instructions,
clause 9.4 is merely declaratory of what would be the position at common
law in any case. It says that the sub-contractor is entitled to recover, as
against the main contractor, any damage, loss and/or expense that he
suffers or incurs as a result of 'any act, omission, default or negligence of
the contractor or his employees, agents or sub-contractors which disrupts the
regular progress of the sub-contract works, or delays the execution of them
in accordance with the dates stated in the sub-contract time schedule'. This
provision is wholly unsatisfactory since it provides no express machinery
for the recovery of such claims; and it is an extraordinary provision to find
in what is clearly a carefully-drafted contractual document. At the very least
one would have expected to find provisions equivalent to those in the JCT
sub-contract forms discussed earlier in this chapter; as it is, it would seem
that sub-contractor's claims under clause 9.4 must be pursued in adjudi-
cation, arbitration or litigation, as appropriate. In practice, main contractors
and sub-contractors would be well advised to try and agree such claims
rather than pursue formal proceedings. Any sums agreed would be payable
outside the bounds of the contract.
These provisions are unsatisfactory from the point of view of both con-
tractors and sub-contractors and it may well be that sub-contractors operat-
ing under this form may be better advised to sue at common law.
701 Architect's instructions are dealt with separately by main contract clause 8; see the commentary
about that in Chapter 15, section 15.3.2.