Client Nominated Subcontractors - "It's not my fault but it is very much my problem"

This is a common arrangement that seems harmless at the start but can cause a problem in from time to time.

The client wants to use a specific subcontractor. They may have used them before, their friends recommended them, they trust their pricing, or like their product. They ask the contractor to carry them under the main contract. The contractor is expected to coordinate, manage, and take full responsibility for the package, as if they had chosen the subcontractor themselves.

The client is often happy to pay markup. Sometimes the arrangement is dressed up as a domestic package. But the truth is, the contractor is being asked to take full contractual responsibility for someone they did not select.

If there is a problem, this is where it begins:

What Actually Happens

Often, contractors do not tender the package. They do not negotiate the scope. They do not confirm the lead times or vet the resources. But once the contract is signed, they are responsible for coordination, progress, quality, programme risk, and performance.

The subcontractor arrives on site, often with a direct line of communication to the client. Instructions are passed informally. Design changes are agreed without going through the main contract. Site coordination is treated as a courtesy rather than a contractual requirement. And when issues arise (as they often do) the contractor is blamed for delay or cost increases, despite having no control over the original appointment.

This is not a domestic subcontractor. It is a client-nominated party being carried by someone else, with all the responsibility and none of the authority.

What the Contract Says

Under most JCT contracts, there is no automatic protection for a contractor carrying a nominated subcontractor. The contract assumes the contractor is responsible for all subcontractors they engage. Once the contractor enters into that agreement, they are on the hook for performance, regardless of how the subcontractor was selected.

The legal position is clear. In the case of Percy Bilton Ltd v Greater London Council, the contractor argued that they should not be liable for delays caused by a nominated subcontractor. The court disagreed. It found that the contractor had accepted the risk by signing the subcontract. The fact that the employer had made the nomination did not relieve the contractor of liability. Once they signed the subcontract, the responsibility became theirs.

Unless the main contract or a supplementary agreement says otherwise, that principle still applies. The contractor owns the risk from the moment the subcontract is signed, even if the client made the decision.

What We Do Now

It depends what side of the fence we are sitting on (!).

As PQS, the default contractual situation protects our client, rightly or wrongly.

If advising contractors, we now insist that where the client wishes to nominate a subcontractor and have them carried under the main contract, it must be properly documented. That usually means a supplementary agreement is put in place, setting out the true nature of the arrangement.

The agreement confirms that the subcontractor has been nominated by the employer, and that the contractor will act in good faith to coordinate and deliver the works. It also confirms that where problems arise, the employer will indemnify the contractor for the consequences.

That includes cost. Any variations raised by the subcontractor flow through to the main contract, plus overhead and profit. It includes time. Delays of up to two weeks may be absorbed. Delays beyond that are treated as relevant events and relevant matters under the contract. And it includes failure. If the subcontractor walks away, fails to complete, or leaves defects, the contractor may bring in a replacement, with any associated time and cost treated as variations.

It is not about avoiding risk. It is about structuring it properly so that everyone knows where they stand before something goes wrong.

Should we get rid of them all together?

No. And even if we wanted to, we wouldn't be able to. How often does the contractor get to pick where the Kitchen comes from?

There is nothing wrong with a client having preferred suppliers or trusted subcontractors. It often improves the result. But if the contractor is expected to carry them under their contract, the rules need to be written down.

Once the contractor signs the subcontract, they are liable. And the client’s involvement becomes background noise. Paying markup does not equal control. Giving direction does not equal responsibility.

If the client chooses the subcontractor, they need to own that decision. If they want the contractor to own it, the contractor needs to price it, vet it, and be allowed to run it properly.

If you do not define that structure at the start, the dispute writes itself later. And by then, the programme is already slipping.