Nominated Subcontractor Agreement Malaysia

13 décembre 2020

Appointment is the procedure by which the employer appoints, selects or approves a subcontractor or a designated subcontractor (« NSC »). The NSC then enters into a subcontract with the contractor (« MC »). It is a way for the employer to maintain some control over the choice of the contractor or the specialized supplier, without necessarily being directly involved in detailed contractual agreements with the specialist. Of course, the best scenario is that the principal contractor retains responsibility for the subcontractor`s payment and does not authorize a direct payment agreement. With the control of the wallet chains, the main contractor can be better positioned to ensure that the subcontractor does its work accordingly. Otherwise, the principal contractor is able to assume all the responsibilities without accompanying rights. Under the fidic contract conditions for construction work (4th edition 1987) (« Red Book 4th »), it acknowledges that the omission of NSC can have serious consequences for both the MC and the employer. It is therefore important to ensure that the subcontractor is authorized and ready to cooperate with the subcontractor. Therefore, MC does not need to use any NSC. For employers, the subject is also clear. Despite any direct payment agreement, there is no contractual practice between employers and subcontractors. As a result, subcontractors are generally unable to sue employers directly, although some cases have done so successfully for non-contractual reasons, such as unjust enrichment and change of sola.

However, the problem is not so simple for the main contractors. Therefore, since employers insist on direct payment, the principal contractor depends on the employer`s payment to pay the subcontractor. However, a delay in payment from the employer would fall on the head of the principal contractor and not on the employer. That is where the challenge lies for the main contractor. For subcontractors, the problem is clear. Since conditional payments are prohibited by CIPAA, subcontractors can sign any contract that imposes conditional payment terms, as they can be sure that such payment terms are not applicable. Therefore, at the end of the day, the principal contractors must still make payments on the basis of payment terms in accordance with the S.36 CIPAA if employers do not pay. The appointment is used because there are benefits to the employer in the use of the system. The main benefit to the employer is the control of selection and performance required by the NSC. Above all, the employer reserves the choice of subcontractor. Although MC delegated part of the work to its domestic subcontractors, MC remains entirely responsible to the employer for this work. The employer does not in any way take the risk of a subcontractor failure.

Mc is also directly responsible for the payment and their basic cooperation directly with the national subcontractor. If, as a « national subcontractor, » there is one who traditionally has no other role to play in the selection and appointment of the employer than to give consent, where necessary under the terms of the main contract. The appointment of the subcontractor is considered to be entirely in favour of MC (a « national matter »). Another advantage is the potential for reduced supply times. Some specialized subcontracting work requires a longer delay than the construction program would allow this work to begin before mc has been selected.