This article is written by Samiksha Khanna, a second year student of  Faculty of Law, Delhi University.

A sub-contract is a contract subordinate to another contract made or intended to be made between the contracting parties, on one part, or some of them, and a stranger [1]  When a person has contracted for the performance of certain work (e.g.to build a house) and he in turn engages a third party to perform whole or a part of that which is included in the original contract, (e.g.to do the carpenter work) his agreement with such third person is called a sub-contract and such a person is called a sub-contractor. [2]

Hence, a sub-contractor is “A secondary or junior contractor working with the main contractor” [3]

In the recent past sub-contracting has emerged as an important aspect where small enterprises are linked with large industrial units, to the benefit of both. The large firms go in for sub-contracting primarily to reduce their costs of production, which in turn, may be traced to relatively lower wages in sub-contracting firms compared to those in parent firms. Building construction being one of the most common examples of how the contractor-sub-contractor relationship works.  The process of sub-contracting being of recent origin there is no separate set of laws for the same. The Contract Law is meant to address the problems of sub-contracting as well. Some of the relevant portions of the Indian Contract Law, 1872 in this aspect are [4]–

• A contract is an enforceable agreement, where a person accepts a proposal to perform an act (designated as promisee) at the desire of another person (designated as promisor) (Preamble of Indian Contract Act).
• For the purpose of a contract, all agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not expressly declared void (Chapter II of Indian Contract Act).
• The term Fraud is defined in the following way in the Indian Contract Act (Chapter II, section 17):

(a) The active concealment of a fact by one having knowledge or belief of the fact;

(b) A promise made without intention of permitting it;

(c) Any other act fitted to deceive; and

(d) Any such act or omission as the law specially declares to be fraudulent.

• A contract is called “contingent contract” if the contract is dependent on the happening of some collateral event. Such contracts cannot be enforced by law unless and until that event occurs. If the event becomes impossible, such contracts become void (Indian Contract Act, Chapter III).
• On the performance obligations, the Indian Contract Act clearly states that parties to the contract must either perform, or offer to perform unless excused by the law (Indian Contract Act, Chapter IV).
• Chapter VI of the Indian Contract Act deals with the question of breach of contract. They Being-

Section 73 – “When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such a breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it”.

Section 74 – “When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken contract, reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for”

The legal position on claiming damages from the main contractor by a sub-contractor is clear as there exists a direct contractual relation amongst the two parties.

Though, there may be cases where a contractor may engage more than one sub-contractor for the completion of a given task. In such a scenario the issue that arises is, will one sub-contractor be able to bring action for the loss suffered against the other sub-contractor due to any mistake or negligence on his part. The general principle is that there is no privity of contract ordinarily between two or more sub-contractors. However, such relations are rarely this simple in practice.

In McArdle v Andmac Roofing Co.; Newton Brothers, Pontin (Contractors) Ltd., who were contractors, arranged with sub-contractors Newton Brothers and Andmac Roofing Co. that they should undertake certain structural repairs and alterations to buildings in a holiday camp. No arrangements were made concerning the safety precautions necessary for the protection of the men working on the site, although Pontin’s constructional engineer controlled when and where the work was to be done. The contractual work included the removal of glass from a flat roof, which was over 12 feet above ground level, and the resulting opening was to be covered by “Stramit” boards supplied by Pontin. but the work was to be done by men supplied by Newton. Once the boards were laid, they were to be covered with felt, bitumen and chippings and that work was to be carried out by Andmac and one of Andmac’s employees was the plaintiff. On April 28, 1962, the glass from the roof had been removed and Newton’s men were laying the “Stramit” boards and Andmac’s men were following laying the felt and pouring on the hot bitumen. At noon, Newton’s men knocked off work and left the still large opening in the roof uncovered and unfenced and they neither left an obstruction near the opening nor informed Andmac’s men that they had ceased work. The plaintiff, whilst walking backwards and pouring the hot bitumen onto the felt, stepped over the edge of the last laid board and fell through the opening, seriously injuring himself. In an action brought by the plaintiff claiming damages for personal injuries against Pontin, Newton and Andmac, the judge found that the plaintiff had not been guilty of contributory negligence and that all the defendants had been negligent. He apportioned 50 per cent, liability to Pontin, 30 per cent liability to Andmac and 20 per cent to Newton.

An appeal was filed by all the three defendants; it was held all the three defendants had been negligent. Pontin was found to be negligent because they were directly concerned with the work in hand and, having employed contractors without parting with their overriding responsibility, they failed to make express provisions with the sub-contractors, Andmac and Newton, as to who was to ensure that safety precautions were taken for the men working together in close proximity in circumstances of obvious dangers; and Newton’s were liable for their men’s failure to safeguard the plaintiff from the danger he was exposed to when they ceased work without informing Andmac’s men of the fact, and without erecting some cover, however elementary, round the hole. In the circumstances, no distinction was made between the defendants and each was held liable for one-third of the plaintiff’s damages. [5]

Hence, in the above case one sub-contractor was held liable for the injury caused to the workman of other sub-contractor.

Similarly, In Michael Humpheryes v Nedcon UK Limited; Storage Engineering Services Limited, the claimant who was one of the sub-contractor for Bancroft Limited, a firm of electrical contractors suffered an injury caused due to the negligence of the other sub-contractor and his sub sub-contractor.  The circumstances of the accident were such that the claimant had been sent to the bulk storage area to do some snagging work on the trays which he had fabricated and installed. He had not been in the bulk storage area for some days and he was unaware that the studs had been fixed into the floor. There was no warning sign on the door to indicate that there were studs placed in the floor of the bulk storage area. The studded area was not cordoned off and no tape was attached to the studs to draw attention to their presence. The claimant opened the door and stepped into the bulk storage area. He walked into the area and on his second step caught his left foot on a stud. The installation work for the shelving was taken by the respondents which required the setting of studs into the concrete floor of the warehouse – one stud at each corner of the shelving unit which would later be placed on top of and secured by, the studs. When the work was completed, the workmen went for a tea break leaving the studs as it is.  The court held both the respondents liable on the ground that they failed to discharge their duties imposed upon them by the Construction (Health, Safety and Welfare) Regulations 1996 i.e. erecting barriers to cordon off the studded area or the placing of warning signs or tapes was reasonably practicable and neither defendant has submitted to the contrary. Furthermore, these failures on the part of each defendant and the failure of each to institute and maintain a safe system of work amounted to negligence. The allegations of contributory negligence contained in the pleadings of the defendants were also not accepted. A greater liability was imposed by the court on the sub-contractor (Respondent 1) their responsibility being more than the sub sub-contractor (Respondent 2). [6]

From the above decisions of the English courts it can be said that in spite of no direct contractual relation, under certain circumstances a sub-contractor can claim damages from other sub-contractor and a plea of contributory negligence can also be raised by the opposite party.

References

[1] Black’s Law Dictionary

 [2] Central Trust Co. v Railroad Co.; Lester v Houston

[3] Black’s Law Dictionary

[4] www.saarcnet.com

[5] [1967] 1 W.L.R.

[6] [2004] EWHC 1260(QB)