Sub-contracting [20 marks]

The main contract and subcontract in a construction project are typically interrelated, and in essence, a subcontract is concluded in view and in the light of the main contract. Such interrelation can also be evidenced by explicit references in the subcontract to the main contract. However, despite their close interrelation, the main contract and the subcontract for construction are typically separate. In effect, the several parties, namely the employer, contractor and subcontractor or subcontractors, form a notional contractual chain whereby each party is bound by rights, duties and liabilities with regard to the party that it is linked with.

1. Explain the legal principle that limits direct liability between the Employer and the Subcontractor? Elaborate with an example [5 marks]