Back-to-back is not a magic phrase

Back-to-back means the subcontract mirrors the main contract, so the main contractor is not left carrying obligations upstream that it cannot pass down. As an intention it is entirely sensible. As a drafting technique it is usually incomplete, and the gaps are predictable.

Payment cannot be fully back-to-back

The Construction Act prohibits pay-when-paid clauses except where the third party is insolvent. So a subcontract cannot make payment to the subcontractor conditional on the main contractor being paid, which is the single thing most people mean by back-to-back payment.

What is permitted is aligning the payment cycle: setting the subcontract due dates so they fall after the main contract dates, giving the contractor time to be paid before it must pay. That is legitimate, and it is quite different from making one payment conditional on the other.

Notices are separate obligations

The main contractor is the payer under the subcontract, so it must issue its own payment notices and its own pay less notices, on the subcontract timetable.

Receiving a pay less notice from the employer does not automatically produce one down the chain. A contractor that has been cut upstream and fails to serve its own notice downstream pays the subcontractor in full and absorbs the difference. That is the commonest way a main contractor loses money on notices, and it happens because the two cycles are managed as though they were one.

Delay does not flow through cleanly

If the main contract is extended, the subcontract is not automatically extended. If a subcontractor causes delay, the main contractor’s liability for liquidated damages upstream is not automatically recoverable from that subcontractor unless the subcontract provides for it.

Subcontracts often contain a general indemnity, which helps, but establishing that this subcontractor caused this delay to the main contract completion date is a substantial evidential exercise, not a mechanical pass-through.

The parts that usually are back-to-back

Specification, programme obligations, quality standards, insurance requirements and the variation valuation rules generally pass down without difficulty, because they impose obligations rather than depend on statutory machinery.

That is worth noting, because it explains why back-to-back drafting feels like it works: the obligations flow down neatly and the mismatch is entirely in the payment and delay provisions, which is where the money is.

What to actually check

• Subcontract due dates and final dates for payment, and whether they leave room after the main contract dates.
• Who issues the subcontract payment notice, and by when.
• Whether the extension of time provision links to the main contract.
• Whether damages recovery is expressly provided for.

Four points, half an hour, and they decide whether back-to-back means anything on this particular project.