Which of the following are reasons why a purchaser wants to embed a subcontracting clause into the main contract? Select TWO that apply:

Which of the following are reasons why a purchaser wants to embed a subcontracting clause into the main contract? Select TWO that apply:
A . To induce the conflicts between the main contractor and subcontractors
B. To improve supply chain transparency
C. To reduce the main contract complexity
D. To keep main contractor liable
E. To condemn whole liabilities to subcontractors

View Answer

Answer: D

Explanation:

There are number of reasons why the purchaser will want to control the supplier’s subcontracting:

– Supply chain transparency: Normally the purchaser has invested a lot of effort into selecting the right contractor. However, the main contractor’s selection of subcontractor might not be in such careful manner, which may result in poor performance. Purchaser must know who subcontractors are. Controlling the subcontracting process can help the purchaser control the outcome.

– Contract terms: the purchaser’s requirements must be reflected in the subcontracts. The subcontracting clauses may require the main contractor to do this.

– Liability: the main contractor may subcontract the whole or a part of its liabilities. Subcontracting clause may bind the contractor to be liable with the work, it cannot just

blame the subcontractor for any faults.

Reference: CIPS study guide page 154-155

LO 3, AC 3.2