Vicarious performance and Privity in Construction Contracts


Vicarious performance is quite common in construction projects. Vicarious performance refers to the performance of contract or part of it by a third party. It is quite rare for contractors to perform construction contracts without receiving help from specialized subcontractors especially in cases of purpose-built premises such as hospitals, factories, etc. Such projects require diversity of expertise that one contractor rarely acquires. Construction projects are known for their multi-contractual relations. Under the traditional construction procurement, employers start by signing a service agreement with an architect or designing engineer. The latter prepares the drawings, specifications, bill of quantities and any other particular documents. The tender process starts with the help of the engineer who may have a significant role in selecting the right contractor for the project. The employer will then sign a construction contract with the contractor who will likely subcontract part of the work.

In principle, employers do not have a direct contract action against sub-contractors and vice versa. This is due to the long-established principle of privity, under which only parties to the contract can claim its enforcement. In the normal course of circumstances, employers and subcontractors do not have a direct contractual link. Over the years, the privity principle was subjected to a number of restrictions. Perhaps the UK Contracts (Third Parties Rights) Act 1999 is an obvious example. In construction cases, courts and arbitrators alike seem to be too conservative when it comes to the application of the principle of privity. They seem to be reluctant to abandon its rigorous application and, thus, employers will be disallowed from suing sub-contractors for their defective workmanship or delayed performance; and, on the other hand, subcontractors cannot claim payment from employers directly.

This traditional attitude has recently been visited in some cases. Some courts seem to be well prepared to find ways to circumvent the rigorous application of the principle of privity in constructions cases. The well-known Hong Kong case of Hong Kong Housing Authority v. Rotegear Corporation Ltd. [2009] HKCFI 625 and the Dubai court of Cassation (213/2008) & 266/2008 cases seem to be good examples. It is the aim of this paper to find out how the United Arab Emirates (UAE) courts can soften the rigid application of the privity principle so that employers are not left uncompensated for the subcontractors’ defective workmanship; and the latter are not left unpaid for the conforming work received by the employers.

For the complete article, please see 
"Masadeh, A. (2014)  “Vicarious Performance and Privity in Construction under the law of United Arab Emirates” International Construction Law Review (ICLR), Volume 31, issue 1, p.108."

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