Application and Regulation of Back-to-Back Clause in Construction Contract

Abstract

As to the application and regulation of "back-to-back clause" in the construction project contract, it is necessary to analyze the dispute of its legal effect and application conditions from three aspects: The background of the clause, the focus of the dispute and the judicial practice. “The Back-to-Back Clause "is a contractual mechanism whereby the Main Contractor links its payment obligations to the Employer's payment, with the aim of sharing the risks in the complexity of the Works and high funding requirements, but may also prejudice the rights and interests of the Sub-Contractor. The core controversy over the terms is whether it is materially unfair, especially if the Subcontractor suffers the risk of indefinite delay or payment. By analyzing the principles of the Civil Code and the latest approval of the supreme law, we should consider the principles of freedom and fairness of contract. In judicial practice, the court usually balances the rights and obligations of each party to determine the payment period and the liability for breach of contract.