NHS bodies in their role as client for construction projects sometimes require a contractor to employ a sub-contractor of the client’s choice (known as a “nominated sub-contractor”). The courts have held in the past that a contractor had no choice but to enter into contract with a nominated sub-contractor, so should not be held responsible for its actions. In some cases, this left the client with no right of recourse for defective works.
The JCT 2005 suite of construction documents makes no mention of nominated sub-contractors so you could be forgiven for thinking that the pitfalls dealt with by the JCT 1998 forms of contract have now been resolved by the courts. This is not the case.
While some other forms of contract still deal with nomination, JCT has decided that nomination is now so rarely used, precisely because of its pitfalls, that it is not worth including in its contracts.
Instead, JCT 2005 allows for named sub-contractors to be used. The client names at least three companies from which the contractor chooses one to be the sub-contractor. By offering a choice to the contractor, the client avoids retaining responsibility for the sub-contractor and can hold the contractor responsible for any issues that arise due to the sub-contractor’s work.
Nomination, however, may be the client’s only option on some projects where specific expertise is required. As the courts may refuse to hold a contractor liable for additional costs or delay to a project caused by a nominated sub-contractor, the client must ensure that it has a direct relationship with the sub-contractor. A collateral warranty between the client and any nominated sub-contractor is therefore essential so that the client can recover any losses directly from them.