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The separation of the contractual relationships exposes the main contractor to risk…
To make a valid pari passu contract, the obligations in the main contract must be mirrored in the subcontract, such that the rights, duties, risks and liabilities can flow through the contractual chain from the employer to the contractor, and subsequently from the contractor to the subcontractor. The terms of the sub-contracts must thus be consistent with those of the main contract, which can be achieved in different ways. Either the two contracts can mirror each other or the subcontract can incorporate parts of the main contract by reference. An example is found in the FIDIC Conditions of Subcontract for Construction, which contain 20 clauses, each similar in content and structure, aimed at aligning the rights and obligations of the parties under each contract.(24)…
Inattentive drafting of pari passu contracts may cause a lack of compatibility, precluding the allocation of liability across the contractual chain to the appropriate party or parties. For example, in Smith and Montgomery v. Johnson Bros & Co Ltd., the…
In case of other imperfections in the drafting of pari passu contracts, such as the failure to expressly incorporate identical terms across both contracts, knowledge of the terms of one contract is not enough to imply such terms in the other contract. For example, as seen in Chandler Bros Ltd. v. Boswell,…
More recently, English courts have ruled that a subcontract that failed to incorporate…
As illustrated by these cases, if the employer and the contractor are independent…
