Thank you for such a detailed question! t is actually something I have looked at in the past (under Option C which gives the same result) and is an area where the drafting could be better to get to the obviously right conclusion that the contractor doesn't pay double for delays.
The simple solution is that when the subcontractor claims you pass that on, in whole, ie you say he is not in delay you just value the work. There is no obligation to take delay damages only a right. The Employer then says yes but I will deduct delay damages and pays a net amount to the contractor who passes on the net amount (after taking his fee) to the subcontractor. Soo the SC claims £1,000 to which the MC adds 10% fee charging E £1,100. E deducts £500 delays damages and pays £600 to MC who (because he was smart and had proper back to back risk) takes his £100 fee and passes on the remaining £500. This leaves everyone where they should be. A slight ***** but it works under the contract and, I believe in law.
A PM/E could try to argue that MC must take the deduction before passing up the payment and then they get to deduct. However, the result is so obviously wrong, inequitable and not what the parties intended it may well fall into one of those rare times the court will imply a requirement much as I have outlined above.
Obviously gets much more complicated where there is more than one SC or the MC is contributing delay or the risks are not back to back.
The simple solution is that when the subcontractor claims you pass that on, in whole, ie you say he is not in delay you just value the work. There is no obligation to take delay damages only a right. The Employer then says yes but I will deduct delay damages and pays a net amount to the contractor who passes on the net amount (after taking his fee) to the subcontractor. Soo the SC claims £1,000 to which the MC adds 10% fee charging E £1,100. E deducts £500 delays damages and pays £600 to MC who (because he was smart and had proper back to back risk) takes his £100 fee and passes on the remaining £500. This leaves everyone where they should be. A slight ***** but it works under the contract and, I believe in law.
A PM/E could try to argue that MC must take the deduction before passing up the payment and then they get to deduct. However, the result is so obviously wrong, inequitable and not what the parties intended it may well fall into one of those rare times the court will imply a requirement much as I have outlined above.
Obviously gets much more complicated where there is more than one SC or the MC is contributing delay or the risks are not back to back.