Hi there,
When a subcontractor provides some Goods to the main contractor, can the subcontractor still use the terminology as "back charge" or is there any other?
Thank you
2 replies
Mar 17, 2020
I'm unsure of the context in which you are using the terminology. If a subcontractor provides materials to the GC, the subcontractor is performing as a material supplier and the "back charge" term is really only applicable when the work/supplies were supposed to be provided by the party being billed.
A back charge is a charge for work performed or costs incurred that, according to the contract, should have been performed or incurred by the party being billed. This generally runs down-the-chain with respect to the amounts that would otherwise have been paid to the party billed. For example, if the owner incurs obligations of the GC, the owner can bill back charges to the GC; or if the GC performs work that the sub was supposed to perform, the GC can bill back charges to the sub.
In a situation in which a sub is supplying material that was previously not contemplated to be provided, it is likely pursuant to some "change order" or modification to the contractual agreement, and would be billed pursuant to the general pay-app or invoicing process.
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Mar 17, 2020
When the time of execution of the Works agreed in the Contract, the main contractor requested the subcontractor to provide some Good/material for the main contractor’s works. In this scenario, the subcontractor will have to bill the Good/material in its subsequent invoice. At this time, what term can the subcontractor use? (Back charge or other)