Sub-contractors and Suppliers - Scottish Construction Contracts - page 282

commercial developments need the ability to sue professional team members and/or
specialist sub-contractors.
This branch of the law of negligence has nevertheless continued to develop in both
Scotland and England. In White and Another v. Jones and Others (1995), the House of
LordsinanEnglishappealdecidedbyamajoritythatasolicitorowedadutyofcareto
beneficiaries under a will which had been negligently drawn up. In the Scottish case
of Scott Lithgow Ltd v. GEC Electrical Projects Limited (1989), Lord Clyde allowed to
proceed to proof a case in which an employer sued a domestic sub-contractor for
recovery of economic loss stemming from allegedly defective wiring. He held that
nomination was not a necessary factor before a duty of care could arise, but it was an
important element where it did exist. Where it does exist it obviously serves to point
towards the degree of proximity which is required for the employer to succeed. For a
further discussion on the law of delict, see Section 10.10.
It must be fair, just and reasonable for a duty of care to exist. This issue was
addressedbytheHouseofLordsintheScottishcaseof British Telecommunications
plc v. James Thomson & Sons (Engineers) Ltd (1999). In that case the employer sued a
sub-contractor in delict in respect of losses sustained as a consequence of a fire break-
ing out in the employer's premises for which the employer held the sub-contractor
responsible. The sub-contractor had been engaged by the main contractor on the
same terms and conditions of contract as those ruling between the employer and
the main contractor. The insurance provisions in the main contract made it clear
that damage caused in the way suggested by the employer was to be covered by an
insurance policy which the employer was bound to take out. In short, the damage
in question was one of the specified perils under the main contract. As such, it was
contendedbythesub-contractorthatitwouldnotbefair,justorreasonabletoimpose
a duty on them to avoid such damage. Their Lordships, however, attached significant
weight to the fact that the insurance arrangements in the main contract afforded any
nominated sub-contractor the benefit of a waiver by the relevant insurers of any right
of subrogation which they may have against the nominated sub-contractor but no
such provision existed for the benefit of domestic sub-contractors. The unanimous
decision of the court was that it would be fair, just and reasonable to impose a duty
of care on the domestic sub-contractors to the employer. See further European and
International Investments v. McLaren (2001) and Tartan American Machinery Corp v.
Swan & Co . (2004).
11.8 Relationship between main and sub-contracts
It is common for main contractors to attempt to incorporate by reference the terms
of the main contract into the sub-contract. This practice of wholesale incorporation
is not to be encouraged and frequently leads to disputes between the parties. The
degree of incorporation can vary. Many main contractors attempt to incorporate their
own programme into the sub-contract, see Scottish Power plc v. Kvaerner Construction
(Regions) Ltd (1998).
The effect of incorporation of main contract terms was considered in Babcock
Rosyth Defence Ltd v. Grootcon (UK) Ltd (1998). In this case the sub-contractor raised