Who’s Got Your Back? - Back-to-back contracts

Have you back-to-backed your contractual risk?

Back-to-back contract arrangements are increasingly popular as principals require head contractors to assume the majority of the liability in delivering a project and, in turn, head contractors try to push down as much of that liability onto their subcontractors.

In such cases care should be taken so that risk is properly allocated and assumed. The head contractor may bear all risk if contracts are not back-to-backed appropriately. Similarly, the subcontractor may end up bearing risk that it is not able to manage.

Tips if you are the head contractor

1. Don't do the dodgy: Confirm the principal's consent to your engagement of the subcontractor.