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Particular person refers to an individual or company selected by the owner and specifically identified in the building contract as the subcontractor whom the owner wants to perform work or services or to supply and/or install an item forming part of the works under the building contract.
Different standard-form contracts also provide for identifying or specifying a particular person but use similar terms ‘nominated subcontractor’, ’selected subcontractor’ or ’preferred subcontractor’. Such terms generally refer to a prospective subcontractor that is selected, specified or nominated by the principal. If you are administering a contract, be familiar with how your contract deals with nominating subcontractors for aspects of the work, as well as the corresponding processes, responsibilities of and consequences for the parties, including any right of the builder to object to an identified particular person.
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Identifying particular persons
Before entering into the building contract, the owner can choose whether to nominate any particular person (ie an individual or company) either:
- by naming or identifying the particular person in the contract before it is signed, or
- indicating in the contract that it will identify its particular person at the relevant time during the works (but before that aspect of the works is to be carried out).
In either case, it is best practice to make the owner’s preferred option clear at the time of tender, in the contract schedule information provided with the information to tenderers.
The ABIC suite of contracts allows the owner (client) the option to identify one or more particular persons to perform works or supply goods or other services under provisional or prime cost sums. The contractor will then subcontract (or contract via a supply agreement) the identified particular person to perform or supply that aspect of the necessary work under the contract.
The purpose and benefit of identifying particular persons
The benefit to the owner of identifying a particular person is to reserve the right to decide which specific subcontractor will carry out an aspect of the work as the contractor’s subcontractor, for a provisional or prime-cost sum . See Acumen note Prime cost items and provisional sums.
The common reason for doing so is to identify a subcontractor with a specific skill or expertise or about whom the owner is confident or has worked with on other projects. In other cases, the owner may know it needs a specific skill or expertise or a custom material, plant or equipment for an aspect of the work, but at the time of tender or contracting has not identified a suitable subcontractor or supplier, or has yet to make a decision about an aspect of the specification which will eventually require a particular person.
Once a particular person is identified by the owner, the contractor contracts directly with that person and it is the contractor who becomes responsible, liable and takes on the risk for those aspects of the work done by that particular person. The owner does not control or have recourse to the particular person and only has recourse to the contractor, in accordance with the contract, for the work of its subcontractors.
For all provisional sum or prime-cost items specified in an ABIC contract, the contractor must call for quotations for the architect or superintendent to consider and assess, before engaging the subcontractor and carrying out the work. The contractor also has a right, if it has reasonable grounds and promptly gives the required notice, to object to contracting with an identified particular person for an aspect of the work (refer to ABIC clause K3.3).
There may not be any commercial advantage to an owner in separately tendering for the work in order to identify a particular person, but the owner is free to do so . In practice, a potential subcontractor may quote retail pricing in response to an owner’s tender or request for quote, whereas a head contractor may be able to secure trade pricing or better.
If the owner identifies a subcontractor as a particular person at tender, to manage the risk that the identified subcontractor will decline the eventual subcontract, that person should be told:
- the location of the site
- the aspect of the work that requires the subcontractor’s services, goods or materials
- the location of the subcontract works (if appropriate)
- that they will be required to enter a subcontract with the head contractor, not with the client
- an approximate program for the aspect of the work that affects the subcontractor
- the procurement method by which the contractor will be selected (and, for example, if it is to be tender by invitation, a list of the contractors invited to tender, if the list is known at that stage).
Identifying a particular person at different stages
If the owner chooses to only identify a particular person at a later time, the information to the tenderers and the draft contract should clearly state that the owner intends to identify a particular person for the relevant provisional or prime-cost sum, but will specify that particular person at a later time, either prior to signing the contract or during the contract.
If a specific particular person is to be identified at the tender phase or prior to signing the contract, the contract schedule information must sufficiently identify:
- the aspect of the subcontract work for the relevant provisional or prime-cost sum, and either the full corporate name and ACN or the trading name and ABN of the particular person for that subcontract work.
Identifying a particular person at tender
If the particular person is identified by the owner in the tender, and has indicated it will only enter a subcontract with the successful tenderer on its own terms and conditions of contract, it is best practice to give the tenderers for the head contract a copy of:
- the terms and conditions of the subcontract or supply agreement the particular person proposes, and
- all relevant documents submitted by the identified particular person with their tender submissions to the owner.
This way, each tenderer is given the opportunity to consider the commercial and contracting risk profile of the terms of the nominated subcontract with that particular person (as well as the opportunity to ‘price in’ that risk). Alternatively, a tenderer may also submit a non-conforming tender which includes identifying a different particular person to take the subcontract, as well as offering competitive pricing and the tenderer’s recommendations why its alternate subcontractor should be preferred. This alternative could then be evaluated alongside all other tenders submitted.
It is best practice to ask tenderers to expressly raise any objections to the identified particular person in their tender submissions. Doing so at the tender phase can manage the risk of complaint or time or cost claims by the contractor, or even dispute under the contract.
If a particular person is not identified or named in the contract before it is signed, the owner cannot compel the contractor to use the preferred subcontractor as a particular person. The contractor may via negotiation agree to subcontract a person the owner has requested (but didn’t identify), but the contractor may claim for additional time and cost (and risk) of taking on a subcontractor that the contractor wouldn’t otherwise deal with, or hasn’t had prior dealings with. If the contractor does not agree to contract with the owner’s requested subcontractor, the owner’s only option would be to engage that person directly as a ’separate contractor’ (see What is a separate contractor below). The owner would then take on the responsibility, liability and risk of the separate contractor’s performance.
What is a separate contractor?
A separate contractor is an individual or company who contracts with the owner to perform some aspect of the works under a building contract. A separate contractor is not a subcontractor to the (head) contractor.
A separate contractor is the responsibility of the owner and completes a portion of the project in a direct contractual relationship with the owner, whether or not the architect is involved in the administration of that contract. A separate contractor is typically under a contractual obligation to cooperate with the (head) contractor. The owner pays the separate contractor directly.
Unless there is some compelling reason, it is not usually advantageous to the owner to engage a separate contractor. Traditionally, this kind of arrangement was used only for very specialised work. If a head contractor cannot agree on terms to engage an identified particular person then the owner may be compelled to contract directly with that particular person as the owner’s separate contractor.
Under the building contract, the owner has contractual responsibility for the acts, errors and omissions of its separate contractor. Under the terms of a fair and balanced contract, this may also mean the owner is liable for time and cost claims, and to reimburse the head contractor for additional cost, loss or damage it incurs, that was caused by those actions or omissions of the separate contractor.
Disclaimer
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