In the case of a back-to-back system, a dispute between the employment master and the employer should have a significant impact on the relationship between the principal contractor and the subcontractor, and vice versa. In this newsletter, we discuss the main reasons why return contracts can be particularly controversial and the main editorial issues that need to be considered and addressed in order to minimize the risk of litigation. There was no agreement between the contractor and the subcontractor at the end of June 2016, but the Court found that, in practice, the parties acted as if there was a return clause and that the original not only approved all payments, but acted directly in front of the subcontractor to authorize the work. The Court found that the payment to the subcontractor depended on the receipt of the payment by the ordermaster. In a case that was tried in early 2016, an engineering firm acted as a contractor in a project and assigned a subcontractor a “back to back” clause for certain jobs. The Court held that the purpose of a “back-to-back” clause is generally to prevent the subcontractor from paying the subcontractor for work that has not been approved or paid for by the contracting authority for reasons related to the subcontractor, such as. B than partial or inappropriate work. Despite the existence of a “back to back” clause in the agreement between the parties and even if the supplier has not received payment from the customer, it does not nullify the obligation for the contractor to pay the subcontractor if it is established that the subcontractor did the work properly. In another case, reviewed at the end of April 2016, the client did not pay due to defects in the work. The Court found that, despite the “back-to-back” clause, the principal contractor is required to pay the subcontractor, since the principal contractor was not present. A back-to-back contract can relate to many different things, but it is most used in construction.3 min read stand-alone contracts contain all the terms of the original contract that are relevant to subcontracting. Such a contract can eliminate cross-references, inaccuracies and inconsistencies that are tedious.

However, drafting a stand-alone contract can be even more tedious than developing a return contract, as each party must review the agreements and decide what conditions will be included in the subcontracting and what conditions need to be changed. The client has entered into a contract or project contract with the principal contractor who acquires part of the subcontractor`s business. In particular, the subcontractor respects the scope, planning and other conditions of the project contract between the client and the principal contractor. In general, “back-to-back” means that each document contains all the conditions and features like the next contract. You can open a back-to-back letter of credit containing all the same items as the previous one.