Pitfalls Under Back-To-Back Contracts: Are Back-To-Back Contracts A Minefield?

I. Introduction

Back-to-back contracts involve at least three or more parties pooling-in their resources at different levels for execution of a same or connected project. The parties include – an employer (i.e. party floating the work / tender), a main contractor (i.e. party to whom the work / tender was awarded), a level 1 sub-contractor (i.e. party to whom the work (or part thereof) has been sub-contracted by the main contractor) and (in certain cases) a level 2 sub-contractor (i.e. party to whom the sub-contracted work (or part thereof) has been further sub-contracted by the sub-contractor).

In a back-to-back contract, rights and duties of the sub-contractor (or a level 2 sub-contractor, as the case may be) are closely mirrored with those of the main contractor towards the employer under the main contract. Back-to-back contracts are a common feature in construction, mining and even IT-ITES sectors.