Sub-contracts
Sub-contracts
149 Must the architect approve the sub-
contractor’s ‘shop drawings’?
It is not unusual for a contractor to submit a sub-contractor’s or supplier’s ‘shop drawings’ for approval before manufacture of the element concerned. Indeed, few sensible contractors would authorise proceeding with manufacture until the architect is satisfied with the details. Of course, in most cases the shop drawings are simply the sub-contractor’s own translation of the architect’s drawings and details into something that the sub-contractor believes is easier to understand in the context of the particular manufacturing process. In other words, the sub-contractor is using the information provided by the architect through the contractor to produce the shop drawings.
I once knew a very brave architect who would respond to the contractor with the following words: ‘If the shop drawings are in accordance with the drawings I have provided, they are correct; if not, they are wrong.’ This is equivalent to saying ‘check them yourself’. It also requires a large degree of confidence on the part of the architect that the original drawings are completely accurate.
Few architects can say that their drawings are guaranteed to be 100 per cent correct. That is not to criticise architects; it is just a characteristic of the complex nature of the profession that discrepancies and other types of error do occur. Therefore, most architects will check shop drawings just to be sure that their own drawings are correct. The problem is that, in checking whether the shop drawings accurately represent their drawings, architects inevitably check things that have been introduced by sub-contractors. Sometimes, sub-contractors will actually change architects’ details to make them suit the particular sub-contract element. Such changes can easily be missed if the architect gives the drawings only a cursory inspection. Architects should either check shop drawings thoroughly or not at all. Even if the architect has no contractual responsibility for checking such drawings, responsibility may be assumed if the architect nonetheless does check them.
In most cases, the architect will want to be satisfied that the shop drawings are accurate and, therefore, will check them. Whether the architect has an obligation to approve the drawings will depend upon the terms of the contract. Such an obligation will usually be found, if at all, in the preliminaries section of the bills of quantities or specification. Ideally, the architect should make sure, before the documents are sent out for tender, that there is no requirement for his or her approval. The absence of such a requirement will not prevent the contractor from sending the drawings for approval, but it will enable the architect to point out that there is no contractual requirement for the architect’s approval. Moreover, the architect should inform the contractor that it is the contractor’s task to check and co-ordinate sub-contractors’ drawings.
Obviously, if the sub-contractor is being asked to carry out part of the design, the position is rather different. The architect, who is usually the design leader, will have a duty to co-ordinate the sub-contractor’s design with the rest. Therefore, the architect will have a corresponding duty to check the drawings to ensure this co-ordination.
The position is, therefore, clear. The architect will rarely have any obligation to approve a sub-contractor’s shop drawings unless the sub-contractor has a design obligation or the contract documents expressly require the architect to approve such drawings. When dealing with the sub-contractor’s design, it is safest if the architect avoids using the word ‘approve’ and instead simply states that he or she has no comment to make. Use of the word ‘approve’ has been discussed elsewhere. It does not usually remove any responsibility from the contractor.
150 Under MW, if the contractor is in
financial trouble, can the employer pay the
sub-contractors directly?
Under JCT 98, there used to be provision for the employer to pay nominated sub-contractors directly in certain circumstances. There are no such provisions in SBC; indeed, there are no nominated sub-contractors in SBC. Even under JCT 98 terms, the direct payment provisions were hedged around by substantial conditions.
It is important to understand that the employer is in contract with the contractor, and the contractor is in contract with the sub- contractors. There is no contractual relationship between the sub-contractors and the employer unless some kind of direct warranty has been employed, because clauses in the main and in the sub-contracts prevent the Contracts (Rights of Third Parties) Act 1999 having any effect. Therefore, the position is that the contractor has undertaken to the employer, for payment, to carry out certain Works. Part of these Works has been sub-let to sub-contractors. That is to say, the sub-contractors have each undertaken to the contractor to carry out their parts of the main contract Works in return for payment from the contractor.
When a sub-contractor carries out work for the contractor, it is part of the main contract Works, and the contractor is entitled to payment for it from the employer. If the contractor does not pay the sub-contractor, the sub-contractor’s redress is against the contractor. The sub-contractor has no valid claim directly against the employer. It is unfortunate for the sub-contractor (indeed for all concerned) if the contractor gets into financial difficulties or even goes into liquidation. That is the kind of thing that the sub-contractor, like any other business, must try to guard against. Some employers believe that they are entitled to pay the sub-contractor directly and then deduct the money paid from the contractor. That is wrong.
The employer who pays directly will be in breach of the insolvency rules by making the sub-contractor into a preferential creditor. Even if that is not an issue, in the case of a contractor who simply will not pay sub-contractors, the employer will undoubtedly be called upon to pay the contractor for the work carried out as part of the main contract by the sub-contractor. The employer will have no defence. It is not an argument for the employer to say, ‘I will not pay you because you have not paid your sub-contractors’. The employer’s duty to pay the contractor under the main contract is not dependent on whether the contractor has paid the sub-contractors. Indeed, the contractor’s relationship with sub-contractors is no business of the employer’s except to the extent that the main contract requires the contractor to include certain provisions in the sub-contract (for example, SBC clause 3.9.2).
On a purely practical level, there is no way in which the employer can be sure that the sub-contractor has not been paid unless the sub-contractor takes legal action against the contractor. In that case, the sub-contractor will recover whatever the adjudicator, arbitrator or judge believes is appropriate.