The Mic Drop Contract......

I want to share a real life story about a subcontract negotiation I undertook on behalf of a coaching client earlier this year.

I will share the actual exchanges, although I am for obvious reasons not sharing the names.

This exchange followed weeks of requesting the contract documents prior to the works commencing. The specialist contractor I represented had their offer accepted and then commenced works, despite the Main Contractor (MC) still not allowing them sight of the subcontract terms.

They then received this wording in an email which included a link to a website with an NEC3 Subcontract of some 800 pages.

I am sure they thought they were being clever, however it came back to haunt them, well I came back to haunt them..... 👻

Main Contractor (MC) Email - Post Works Commencing 

Dear Sirs,

XXXX Project Phase 5 Works

Subcontract Order S-XXXXX/XXXXXX

Please find attached a copy of your Sub-contract order and link to supporting documentation.

Please complete and return the attached Insurance Questionnaire.

We require that you sign and date the attached Sub-contract order and return to the following address

XXXXXXX 

Please note that it is a condition of the Sub-contract that no payment will be made until the original Sub-contract order has been signed and returned to this office.

Yours faithfully,

Main Contractor QS.

Note the wording in italics! Have you ever come across this, if so please let me know in the comments or DM me?

I responded with this wording below, setting them straight and making it clear on where my clients stood.

My Response, acting as my clients representative.....

Hi Mr QS

Please note that our contract is based on your acceptance of our offer as works have commenced. 

We do not accept that payment is conditional on us signing up to your contract, especially given that we only received this after we had started. I am sure you will be aware that making payment conditional on us signing is contrary to the Construction Act and the UCTA, specifically under Part 8 of the Local Democracy, Economic Development and Construction Act 2009, a payment clause is invalid if it makes payment conditional upon the performance of obligations under another contract or a decision by any person as to whether obligations under another contract have been performed.

We will revert to you in due course. If this is an issue we can halt works on site until a separate agreement is reached, any delays will be at your liability.

Regards

Yosof

So what happened next?

I hope you are sitting comfortably, as Kansas is about to go bye-bye!!

I wrote to the MC and informed them that the price was going to be increasing to cover the additional risk and for administering the subcontract, as well as my costs for reviewing the very lengthy subcontract.

The MC had no choice but to pay the increased cost and for the cost for me to review the contract, which then led to many months of negotiation – but crucially my client was paid.

The final negotiations stalled as we could not agree to remove certain terms and I proposed a further increase to cover the costs. This was rejected and then we were issued with the tracker which we had been using to monitor the changes and agreements.

One clause stuck out and this article is about it, as you will literally not believe what was said by the MC legal adviser.

The Clause in dispute…

I objected to this clause because in essence the MC was expecting my client to indemnify them if any information provided contained any errors! I know, right – I mean how absurd, but this is the type of b@llshit I see regularly 💩

 20.2 "The Subcontractor is not entitled to rely upon any Reference Information provided to it by or on behalf of the Employer or the Contractor and the Subcontractor has satisfied or will satisfy itself as to the accuracy and adequacy of such information. The Subcontractor is deemed (i) to have verified all Reference Information provided to it by or on behalf of the Employer or the Contractor, whether contained in the subcontract works or otherwise including any planning or development-related information affecting the subcontract works or the Site, and (ii) to have obtained any supplementary information required by it. The Employer or Contractor makes no representation as to the accuracy, completeness and/or adequacy of any such information provided to the Subcontractor and the Employer or Contractor has no liability in respect of any such information."

The Exchange

Yosof: Clause 20.2 to be struck through. SPECIALIST does not accept any liability for verifying any information provided to it for the purposes of this Subcontract. Any variations will be charged.

MC Response 1: wording to remain.  SPECIALIST to take a view on this risk and price for same.

Yosof: SPECIALIST amendment to remain.

MC Response 2: Rejected.  This is standard.  SPECIALIST are a specialist contractor and it is up to them to determine if the information provided is accurate and adequate. 

Yosof: This is not standard. MAIN CONTRACTOR are to ensure their own information is correct and any deviation is a variation. This is non-negotiable.

MC Response 3: We are probably just going to have to agree to this Mr QS.  We have enough ammunition in other places.

Mic Drop!!!!

 So let me restate that “We have enough ammunition in other places” – this is an NEC3 Subcontract remember.

NEC3 is all about collaboration. In what universe does this sound like collaboration?

Does this sound like the actions of a party who want to collaborate?

Now you see why it is critical to get your contracts reviewed professionally before you sign them.

And remember do not fall for the old, “if you do not sign, we won’t pay you” BS tactic. That is actually a breach of your statutory rights, i.e. illegal – use my script above or get me to speak to them for you!!

Another point, we need to look at was the suggestion that the specialist was to "take a view on the risk". For completeness I suggested an increase in costs, this was flatly rejected, so what exactly was the option - take a view, but that view means you take the risk for free!! Un-f@cking-believable right!! 🙈

There are too many main contractors out there pulling this b@llshit and it needs to stop.

Happy Ending?

This was a very happy ending 😃, because in the end my specialist contractor client not only got the terms they wanted, they got to see behind the veil of what some main contractors get up to and it shocked them into action.

This salutary lesson led to my client now refusing to accept dodgy terms on all future contracts.

Remember - you are not a sub-contractor, you are a specialist contractor.

Get the respect and payment you deserve.

Stop being treated as lesser due to jargon filled contracts, written like that one to screw you over.

I’m Yosof

I’ve personally watched my dad’s construction business go through insolvency as he followed bad advice and didn’t have contractual boundaries.

I couldn’t help my dad then but now I use my three decades of experience as a board level contractor and as a dispute resolution specialist, my expert knowledge of construction contract law and my negotiation mindset & communication expertise to help businesses never get to the point my dad got to.

If you enjoyed this article please let me know in the comments, share or follow me via my pages or connect with me on LinkedIn.

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