JBCC contract – Can the principal agent issue instructions directly to a sub-contractor?
This is a question that often comes up in discussions on the JBCC N/S Subcontract Agreement.
An agent, be it an electrical or mechanical engineer, can have delegated authority to issue instructions. Most Subcontractors of these disciplines will know that you work closely and sometimes exclusively with the agent in your respective discipline. It flows naturally from this relationship that these agents also provide Contractor Instructions as per clause 17 of the N/S Subcontract Agreement, to subcontractors directly. The reason is quite practical as most other agents or even the main contractor, may not understand the technical nature of the work.
However, sometimes disputes do show up as an agent may act directly without the knowledge of the other agents or main contractor and thus cause a significant impact on the project’s value..
The NS agreement is very clear in stating that “The contractor may issue contractor’s instructions to the subcontractor…”.
This is very specific and deliberate, and we don’t find a contractual provision providing for an agent to issue a contractor’s instruction to a subcontractor.
Furthermore, the NS agreement clarifies that the principal agent acts on behalf of the employer. The principal agent or other agents can therefore not act on behalf of the contractor.
So, what can be the cause- or the consequence of an agent acting directly and issuing instructions?
Essentially, the risk is on both the subcontractor and contractor under these circumstances. The contractor need these instructions in writing in his contract with the employer to be able to adjust his contract value. If they only show up on the subcontractor side, he has no automatic contractual recourse to claim the adjustment in his certificate.
The subcontractor, if he complied with the instruction, has now acted outside the provisions of the JBCC N/S Sub agreement and if challenged by the main contractor, would have no way of getting paid for said instruction.
The arrangement is quite logical as it stands: if an agent or the principal agent wishes to issue an instruction that will guarantee compliance by the subcontractor, they must simply issue the instruction to the contractor, who are then in turn obligated to issue the instruction to the subcontractor. If an agent circumvents the process, they not only challenge the contractor’s authority and his ability to control the work on site, they also cause problems in the process of getting paid for additional work.
That being said, it will only be in circumstances where, for some reason the agent who issued the instruction leave the parties high and dry without any recourse. This would seldom be the case, but it is something to be cautious of. Many times, the problem is only discovered after practical completion when a subcontractor is trying to finalise his final account. If such a circumvented action causes a problem, the agent can always re-issue via the contractor and to an extent ratify the contractor’s instruction.
However, Subcontractors need to ensure and request their agent to follow due process or keep the contractor in the loop when issuing these instructions so as to manage their own risk and ensure swift payment for instructions that may cause additional cost.
If you have any specific questions or unique circumstances you would like some clarity on, feel free to ask your question to our team of experts at info@lerouxconsulting.com.
Kindly note that our posts on our website does not constitute professional advice and the comments, opinions and conclusions drawn from this post must be evaluated and implemented with discretion by our readers at their own risk.