Back To Back Payment

One of the issues before the court was the meaning of the term back to back payment.

Back to back payment. An overview of back to back payment clause in different countries united states of america some of the states in the usa such as alabama alaska arizona etc. Have legally permitted the main contractors to use back to back payment terms while some other states such as california and new york considers the back to back payment clauses as illegal clauses. A common feature found in back to back contracts is a provision that payment to the subcontractor will be conditional upon the main contractor receiving payment under the main contract. Wan chung engaged the defendant super king as its sub contractor who in turn engaged the plaintiff tim lee as a sub sub contractor.

The relevant contract stated that the agreement was for supply installation of the works on a back to back payment basis. A back to back transaction consists of two legally separate but economically linked sale and purchase transactions which otherwise share the same trade details.