Most standard form building contracts provide for the incorporation of the main contract into the subcontract. What effect does an Incorporation by Reference clause in the subcontract have? Recently the Ontario Superior Court held that it does not mean that an obligation to post security for lien claims contained in the main contract is incorporated into the subcontract.

This decision highlights the need for parties to building contracts to carefully consider what they intend by an Incorporation by Reference clause. These clauses are dangerous for subcontractors because they may impose unforseen obligations arising from the main contract which they had no part in negotiating. Courts have been sensitive to this issue and have been reluctant to apply these clauses, holus bolus.

incorporation by reference - interpretation - building contracts - sub-contract