About Onerous Clauses
There is continuing evidence that Main Contractors are becoming increasingly aggressive in their relationship with Subcontractors through the inclusion of difficult and onerous clauses increasing risk of poor or non payment and insolvency with increasing numbers of construction industry companies failing. According to official figures, in the year ending 31st March 2023, an extraordinary 4165 construction companies became insolvent.
It is increasingly vital that every clause is examined and amendments are made so as to mitigate risk as far as is possible. Below are some examples of clauses that you would not want to see in your subcontract:
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"The Sub-Contractor has had an opportunity of inspecting the physical conditions, (including the sub-surface conditions) or obstructions, the existence and extent of any mains or public services and installations, watercourses, channels, contamination, hazardous materials, unexploded bombs, pipes, sewers, drains, cables or other conducting media, structures and any other objects of any nature whatsoever under, in, on or over the Site and other conditions of or affecting the Site and shall be deemed to have fully acquainted himself with the same and to have obtained all necessary information as to risks, contingencies and all other circumstances which may influence or affect the execution of the Works. No failure on the part of the SubContractor to discover or foresee any such condition, risk, contingency or circumstance, whether the same ought reasonably to have been discovered or foreseen or not shall entitle the Sub-Contractor to an extension of time pursuant to clauses 2.17 to 2.19 (inclusive) and/or to any adjustment to the Sub-Contract Sum including any loss and expense pursuant to clauses 4.15 to 4.17 (inclusive)".
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"The Sub-Contractor shall indemnify the Company against all losses, damages, costs, and claims including but not limited to all consequential and indirect losses that arise from any breach of this Sub-Contract by the Sub-Contractor. Where such losses cannot be ascertained at the time of the breach the Company may make a bona fide estimate of such losses provided that such losses are ascertained within a reasonable time thereafter. Any such losses or estimate of such may be deducted by the Company from any payment due to the Sub-Contractor provided that the Company issues notice of such deduction pursuant to Clause 9(c) of these Terms and Conditions or the Company may recover such losses from the Sub-Contractor as a debt."
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"The Sub-Contractor undertakes for a period of 36 months not to enter into any private, commercial or contractual arrangement with the Client directly and / or together with or for any other contractor or agent whomsoever employed by the Client where it relates to the above stated Project or any other project which the Client is acting as employer, and will only carry out work in relation to this Project where it has been instructed to do so by the Main Contractor. In the event the Sub-Contractor breaches this clause 11 the Sub-Contractor shall pay to the Main Contractor as liquidated damages the Contract Price as defined within any private, commercial or contractual arrangement entered into between the Sub-Contractor and the Client (a copy of which shall be provided within 5 days of a request by the Main Contractor) and the Sub-Contractor acknowledges and agrees that it shall be a genuine pre-estimate of loss suffered by the Main Contractor."
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"The Sub-Contractor shall be fully responsible for the adequacy and suitability of any existing structures, foundations and sub-structures at the site which are to be incorporated into the Sub-Contract Works and for their compatibility and integration with the Main Contract Works."
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