The client has a project agreement or contract with the prime contractor who obtains part of the subcontractor`s activities. The specificity of a consecutive agreement is that the subcontractor respects the scope, planning and other conditions of the project contract between the client and the prime contractor. In this bulletin, we discuss the main reasons why consecutive contracts can be particularly controversial, as well as the main drafting issues that need to be considered and addressed to minimize the risk of litigation. So there are clear benefits for entrepreneurs to implement consecutive agreements. In practice, however, drafting consecutive agreements can be a difficult task. The first approach is often seen by entrepreneurs as the simplest and therefore most cost-effective way to pass on responsibilities. However, without special attention, such an approach can often lead to difficulties. Particular attention should be paid when drawing up the consequential provisions. For example, a general provision that all references in the main contract to the “employer” and the “prime contractor” in the subcontract are to be understood as references to the “prime contractor” and the “subcontractor” respectively may not be appropriate for an obligation and could result in the invalidity of an essential provision of the contract or be subject to an interpretation that was never intended. In addition, with long and detailed contractual specifications (often in the form of employer requirements), it can be very complex and even contentious to separate the relevant obligations for each individual subcontract. The biggest concern of suppliers is that they inadvertently take the risk for inappropriate matters given the size and scope of their respective subcontracts.

Regardless of the editorial approach chosen, a number of issues require special attention: consecutive agreements, with which a prime contractor tries to pass on his obligations and responsibilities to the employer to his subcontractors, are increasingly becoming a feature of construction projects. While they can be a practical way to transfer risks and obligations through the chain of responsibility, inadequate wording can lead to particularly complex and difficult disputes. A common feature of consecutive contracts is the provision that payment to the subcontractor is subject to receipt of payment by the prime contractor under the main contract. However, such “payment at the time of payment” clauses are not enforceable in construction contracts under the laws of certain jurisdictions, including England and Wales and Singapore. Sometimes a “pay-for-certification” clause is considered an appropriate compromise, unless it is also prohibited in the relevant jurisdictions, as will soon be the case in England and Wales. Even if such clauses are not prohibited by applicable law, they are often rejected by subcontractors who expect to be paid once they have properly fulfilled their obligations under the subcontract, regardless of the position higher up the chain. Subcontractors may not subcontract, in whole or in part, services authorized by a mission order to subcontractors without the prior written consent of Prime. If Prime Contracts agrees to subcontract any part of the work to be performed under a contract, the subcontractor must first obtain a written agreement from each subcontractor identical or comparable to the following sections of this agreement: interactions with the customer, exclusivity, intellectual property rights, confidentiality, conflict of interest, subcontracting, warranties, indemnification, limitation of liability, insurance and any other disposition provisions contained in the respective order of tasks.

A consecutive agreement is an easy-to-enter form of partnership that is most often used when working together on a particular project. The parties remain independent, no new legal entity is created. Stand-alone contracts contain all the terms of the original contract that are relevant to the subcontract. Such a contract can eliminate cumbersome cross-references, inaccuracies and inconsistencies. However, drafting a stand-alone contract can take even longer than drafting a consecutive contract, as each party must review the agreements and decide what terms to include in the subcontract and what terms need to be changed. .