A contractor won a tender and engaged with subcontractor for performing development and infrastructure work. The parties did not sign any contract but their agreements were based on signed work orders. The contractor argued that it is not obligated to pay the subcontractor because the contractor was not paid.
The Court held from the behavior of the parties it is construed that the settlement of accounts between the contractor and the subcontractor was subject to the accounting between the contractor and the client. In other words, the subcontractor is entitled to payment only in respect of amounts approved by the client- as is standard in this type of transactions under the principle of "back to back", whereby there is a correlation between the payments paid by the client to the contractor and the payments paid by the contractor to the subcontractor. In this case, it stands to reason that there must be a correlation between the quantities for which the client will pay the contractor and the quantities for which the contractor will pay the subcontractor - This conclusion is also supported by the behavior of the parties because the subcontractor had a meeting with the supervisor appointed by the client in which the subcontractor tried to convince that he deserves more money.