Third Parties Agreements

Third-party beneficiary: If the contracting parties intend to ask a third party to apply for the performance of a commitment made in the contract, that person is the third beneficiary. The negotiation, development and agreement of the terms of most third-party agreements (whether real estate or financial agreements) are generally determined by more urgent factors at this stage than the prevention of conflicts between their final terms and those of a construction contract. As mere defenders of construction rights, we will be involved in the process much later or if the contractor may not have been involved. In fact, the lease, modification license or financing agreement are often considered the contractor`s fait accompli – that`s “what it is.” There is no room for manoeuvre and the owner/financier will not accept anything else. From the employer`s (i.e. tenant or borrower) perspective, the employer does not want to be exposed to risk because it has agreed to something “on the line” but cannot cause the contractor to reflect the same “on-the-line” obligations. Therefore, the employer simply wants the contractor to assume all of its obligations (as long as they relate to the work), so that there are no potential deficiencies. But wait a minute – just because the employer agreed to something on the line (to get his lease or withdraw money) why would the supplier keep the baby? Another example is obtaining all the necessary consents, a tenant`s commitment that is usually included in each change license. The contractor must be very careful in carefully considering the commitments he may make to the employer/tenant as part of the third-party agreement with respect to his obligations under the construction contract.

This may be a classic case of bonds imposed by backdoors. For example, the construction contract may be completely silent as to who should obtain the building permit. In addition, the construction contract may provide that the contractor is only required to assist the employer in obtaining all necessary consents, but the onus is on the employer to obtain them. If the amending licence stipulates that the tenant is absolutely obliged to obtain the necessary authorizations to carry out the work (e.g.B. building permit, allocation of the party, etc.), which he will often do, the contractor will assume this obligation under the contractual clause of third parties, as if it were directly stipulated in the contract of work. The employer/tenant can then simply refer to this clause and say that this obligation, since it relates to the performance of the work, is included in the construction contract and represents the risk to the contractor. The situation may be aggravated if the amendable licence also provides that the lessor is compensated for any liability for non-obtaining consent, authorization or license, etc.