Sub-contractors and Suppliers - Scottish Construction Contracts - page 287

possible that they intend to rely on their retention of title clause, see Sandhu v Jet Star
Retail Limited (2011).
11.13 Supply of goods by sub-contractors
A distinction falls to be drawn between materials supplied by a supplier and those
supplied under a sub-contract, see homas Graham & Sons v. Glenrothes Develop-
ment Corporation (1967). As seen above, title to goods or materials supplied by a
supplier will normally pass to the contractor upon delivery to site, unless title has
been retained by the supplier under a retention of title clause. In contrast, in the case
of a sub-contract, i.e. a contract for the supply of goods and services, the common law
applies and ownership passes when the goods or materials are fixed to the structure,
see Stirling County Council v. Official Liquidator of John Frame Ltd (1951).
The conceptual difference between goods or materials supplied under a contract
of sale and those supplied under a contract for the supply of goods and services is
further illustrated by the way in which the SBC deals with the purchase of off-site
materials. Clause 4.17 of the SBC provides that if the Architect is of the opinion that it
is expedient to do so, the Employer may enter into a separate contract for the purchase
from the Contractor or any Sub-Contractor of any materials or goods prior to their
delivery to site. The equivalent provision to the SBC clause 4.17 in the SBC/DB is
clause 4.15.
If such a contract is entered into, the materials or goods cease to form part of the
contractandtheContractSumisadjustedaccordingly.Suchaprovisionisparticularly
useful in the case of major equipment which is being manufactured by a specialist
supplierinitspremisesandwhichneedstobepaidforpriortodeliverytosite.his
has the result of characterizing the transaction as a contract of sale, which is subject to
the Sale of Goods Act 1979, which allows ownership to pass prior to delivery. Clause
4.17 of the SBC falls to be contrastedwith the correspondingclause in JCT 2011 which
allows the amount stated as due in an interim certificate to include the value of 'listed
items' before their delivery to site, provided that the Contractor demonstrates that
after payment, such listed items will become the property of the Employer. For the
reasons stated above, under Scots law it would not be possible to demonstrate that
ownership had effectively transferred in such circumstances, and hence the difference
in approach under the SBC.
Clause70.1oftheNEC3providesthatwhatevertitletheContractorhastoplantand
materials (i.e. items intended to be included in the works) outside the Working Areas
passestotheEmployeriftheSupervisorhasmarkeditforthecontractinquestion.
Forthereasonsstatedabove,itisunlikelythatthisclausewillbeenforceablewhere
the contract is subject to Scots law, and so if the intention under such a contract is to
transfer ownership in off-site materials to the Employer, a Z clause of similar effect to
the SBC clause 4.17 will be required.
In terms of clause 2.15.2 of the Standard Building Sub-Contract Conditions for use
inScotland,wherethevalueofunixedmaterialsorgoodswhichhavebeendelivered
to or placed on or adjacent to the works has been included in any Interim Certifi-
cate issued under main contract, and the amount properly due by the Employer to the