Sub-contractors liability

A construction contract is also considered to be particularly useful in such cases where, in breach of a contract, the sub-contractor then proceeds to delay completion of the overall work, having known at the date of contracting that the main contractor is liable to liquidated damages or forfeiture for delay, the liability of the sub-contractor to the contractor is increased, in keeping with the decision in Hadley v. Baxendale (1854) 9 Exch 341. Therefore, with this in mind, the main contractor will then be able to recover the damages they have had to pay out to the client owing to the delay caused by the sub-contractor, or profit they would have made, together with the cost of work, supported by Biggin & Co Ltd v. Permanite Ltd [1951] 2 KB 314, CA.

However, it is also to be appreciated that knowledge of the main contract is not sufficient to prove the sub-contractor agreed with the main contractor to be bound, so if the sub-contractor properly completes their work, their right to payment will not depend upon the certificate of the architect, notwithstanding it is a condition precedent to payment to the main contractor, in keeping with the decision in Southern Water Authority v. Carey [1985] 2 All ER 1077. But where the sub-contractor expressly contracts to be bound by the terms of the main contract, provisions as to retention money will be applied to them proportionally, supported by Geary, Walker & Co Ltd v. Lawrence & Son (1906) 2 Hudson’s BC (4th Edn) 382, CA. Nevertheless, it must also be recognised that a sub-contractor who voluntarily undertakes extra work or uses better materials than those stipulated has no claim, according to Ashwell & Nesbit Ltd v. Allen & Co (1912) 2 Hudson’s BC (4th Edn) 462.

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