what does a superintendent need to collect from a subcontractor before leaving the job

What Do I Practise When a Subcontractor Doesn't Perform?

In a Nutshell

Builders need to manage both the "front-stop" and "dorsum-end" of works performed by subcontractors and then that builders can take appropriate steps if a subcontractor performs defective work or fails to stop a job.

Front End

1. Ensure that written subcontracts are entered into earlier subcontractors commence on site – with time sensitive jobs there tin can be a temptation to engage subcontractors without a written subcontract. Lack of a written farm can prove to be a major headache for a builder if there is a later problem with a subcontractor.

ii. Follow your purchase order procedures – For fourth dimension sensitive rectification works, site supervisors may be tempted to procure rectification works by fashion of an "extra over" on existing unrelated purchase orders. Costs of those works tin can prove to be difficult to identify at a subsequently stage.

iii. Subcontracts – Y'all should consider maintaining a suite of subcontracts within your business concern that will allow the following problems to be addressed when a subcontractor is engaged –

a. The term of the subcontract, scope of works (with provision for how the scope is to exist varied), program of works and the timing for significant milestones.

b.Warranties and indemnities that are to be provided by the subcontractor. You should ensure that whatever warranties and indemnities are back-to-back with the caput contract where appropriate.

c.The statutory warranties implied by the Dwelling house Building Human action 1989 are set up out in the subcontract. Amendments to the Home Building Act 1989 which commenced on one March 2015 confirm that statutory warranties are implied into subcontracts entered into from that date. Where subcontracts relate to residential building work in the structure of new strata buildings,ane March 2015 amendments to the way the date of completion of residential building piece of work is calculated in the Home Building Deed 1989 operate to align the showtime of subcontractors' warranty periods with the start of a caput contractor's warranty periods; namely, from the issuance of an occupation certificate.

d.Requiring a subcontractor have in place adequate insurances before they commence work on site.

e. The date of a Subcontract Superintendent for the subcontract works.

f.The mechanism for quality control and acceptance of the completion of farm works.

g.Whether a defects liability period will apply. Whatever defects liability period under the caput contract should be taken into account.

h.The form of retention sums, how those retention sums are to be applied and when retention sums are to be returned.

i. Inclusion of a mechanism assuasive for the head contractor to elect whether rectification works are performed past the subcontractor, or the costs of rectification works are to be fix off against amounts due to the subcontractor.

j.How disputes are to be resolved under the subcontract. Information technology may exist helpful for disputes to be resolved by reference to an independent skillful, either appointed past agreement or by an alternative dispute resolution organisation such equally the Institute of Arbitrators & Mediators ("IAMA"). Consideration should exist given to the dispute resolution procedure and whether the parties will agree to be leap by the determination of the independent expert.

k. Liquidated damages as appropriate to the project should exist considered particularly in view of any liquidated damages that may go due under the head contract.

l.The inclusion of a termination clause, with steps for issuing a detect of substantial breach and show cause notice and the fourth dimension to answer.

4. Dorsum to back subcontracts – Generally, information technology is important that any standard form subcontracts that are used by your business organization are back-to-back with caput contracts, so that where possible, any risks that have been assumed by you under a head contract are passed down the line to subcontractors. While carefully drafted subcontracts may provide protection for risks assumed by a builder under the caput contract, you may remain liable in negligence for a breach of any duty of care owed past you, such as a failure to supervise and so yet be liable for a % of the damage caused past your subcontractors.

5. Contracting out of the Civil Liability Act and Indemnities – Exist enlightened that if your Caput Contract contains clauses stating that you lot have either contracted out of the Civil Liability Deed 2002 or are contractually liable for the acts or omissions of your subcontractors then you will exist liable for the acts of your subcontractors, in which example you lot demand to –

a. Ensure that your insurance policies cover this boosted liability for your subcontractors.

b. Maximize your power to recover from your subcontractors any liability imposed upon you lot under the Caput Contract by following the steps recommended above in relation to those subcontracts.

c. Be aware that the best subcontracts in the world may not exist of much assistance if your subcontractor goes broke or into liquidation, therefore the financial continuing and track record of your subcontractor is also a very important consideration, as a cheap price from a fly-by-night subcontractor may cost you lot a lot in the end if that subcontractor is not effectually 6 months later when problems arise leaving y'all to carry the cost alone.

Dorsum End

ane. Collection of evidence – There are some simple techniques that can be executed to protect your concern in the effect of a failure by a subcontractor to comply with the terms of their engagement, as follows:

a. A picture paints a chiliad words – clear photographs of whatever incomplete works or defective works can be invaluable when directing a subcontractor to return to rectify lacking of incomplete works or recovering costs of rectifying such works.

b. Investigate and record – Consider implementing procedures for lacking or incomplete works to be investigated and recorded. Standard form written report sheets which tape time/date of inspection, name of staff member who has inspected and a brief description of the issue should be considered.

ii. Notice of breach – Where a subcontractor has failed to consummate works, seek legal communication on whether information technology is appropriate to issue a notice of substantial breach or evidence cause find. If work remains uncompleted, you should seek communication on whether to terminate the contract and seek damages, or enforce specific performance of the contract.

iii. Alienation of subcontractor statutory warranties – In the instance of a breach of subcontractor statutory warranties pursuant to the Home Edifice Act 1989 where a subcontract is entered into on and from ane March 2015:

a. Reasonable efforts must be made by the builder seeking to enforce the subcontractor statutory warranties to ensure written notice is given to the responsible subcontractor within half-dozen months after the breach of the subcontractor's statutory warranty becoming credible.

b. A builder still in control of a building site must non unreasonably refuse the subcontractor access to the residential building work concerned every bit may be required to rectify the breach.

These duties exercise non apply where a farm is entered into before 1 March 2015, however, information technology is prudent to notify subcontractors of defective works in a timely style and where practicable provide an opportunity to rectify defective works.

iv. Record all communications with subcontractors in relation to lacking or unfinished work – Go along on file all messages of need, prove of defective or unfinished work set up to subcontractors, responses from subcontractors, and invitations to subcontractors to inspect lacking or unfinished works prior to those works beingness rectified or completed.

v. Documentation in support of backcharges – Where unfinished works or defective works need to be completed by the head contractor and a backcharge is issued to the subcontractor pursuant to a "set-off" clause it is important to comply strictly with the terms of the subcontract relating to "gear up offs" and backcharges and retain all purchase orders, contracts, tax invoices and receipts for costs related to completion of unfinished works or rectification of defective works.

6. Consider commencing debt recovery proceedings – A backcharge will be inappropriate if at that place are no amounts to gear up-off confronting the costs that yous wish to recover from the subcontractor. In those circumstances you should consider seeking advice on pursuing debt recovery proceedings. Your contract administration procedures and evidence of the unfinished work/defective work will then become vital to your prospects of success in any such debt recovery proceedings.

7. Concluding note on "corporate memory"– Finally, like all memories a corporation's memory is not infallible. One of the issues that companies can struggle with is where employees leave and there is no "paper trail" to allow disputes to be resolved, or even in some case for disputes to be appropriately identified. Setting upwardly your business organization processes and seeking legal advice or advice from independent experts at the critical points during a dispute can help to alleviate this problem.

***The information contained in this article is general information only and not legal communication. The currency, accuracy and completeness of this article (and its contents) should be checked by obtaining independent legal advice before you take any activeness or otherwise rely upon its contents in any mode.

Prepared by Bannermans Lawyers

20 March 2015

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