The Hidden Risks of ‘Back-to-Back’ Contracts in Sub-Saharan Africa
Executive Summary
In Sub-Saharan Africa, “back-to-back” contracting is widely used to align subcontract terms with the main contract. While this approach appears efficient, it often hides serious risks: disproportionate obligations for subcontractors, exposure to delayed payments, and vulnerability to termination linked to disputes beyond their control.
This article explains the hidden pitfalls of back-to-back contracts and offers practical mitigation strategies such as carving out exceptions, negotiating fair payment terms, and ensuring dispute resolution mechanisms align with local laws. The bottom line: back-to-back contracts should align interests, not transfer risks unfairly.
“Back-to-back” contracting, where subcontract terms mirror those of the main contract, has become increasingly common in Sub-Saharan Africa. While attractive for risk allocation, it can carry hidden dangers for both main Contractors and Subcontractors.
Why Back-to-Back is Risky
- Unrealistic Flow-Down Obligations – Subcontractors may be held to obligations (e.g., financing, insurances, or security requirements) disproportionate to their scope.
- Payment Delays – Subcontractors’ payments are often conditional upon the Employer’s payment, leaving them financially exposed.
- Termination Risks – Subcontractors risk termination tied to main contract disputes, even if not at fault.
- Jurisdictional Uncertainty – Local courts may interpret or limit back-to-back liability differently, creating enforcement and compliance challenges.
Risk Mitigation Strategies
- Clearly define exceptions (e.g., payment obligations not strictly tied to Employer payment).
- Ensure dispute resolution clauses are workable locally.
- Provide carve-outs for risks beyond Subcontractors’ control.
- Negotiate balance: Subcontractors must not be the “insurer” of the main contractor’s performance.
Key Takeaway
Back-to-back clauses should be tools for alignment, not instruments for unfair risk transfer. Careful drafting and negotiation are essential in Sub-Saharan projects where legal frameworks vary widely.
At Conslex Contract Solutions LLC, we help Contractors and Subcontractors working across Sub-Saharan Africa strike the right balance in contract drafting. Our expertise ensures back-to-back provisions protect your position without exposing you to unnecessary financial or legal risks. If you would like tailored advice for your project, connect with us at info@conslex.com.