Sponsoring Pass-Through Claims on Behalf of Subcontractors

摘要

It has been said that the shortest distance between any two people is the "middleman." This certainly rings true when subcontractors on a project wish to pursue legal claims against project owners. In most states, subcontractors cannot sue own- ers for delays, unexpected conditions, defective drawings, or any other kind of contractual damages suffered. Instead, the subcontractor must look to the general contractor alone for payment because the general contractor is the only party with whom the subcontractor has privity of contract. These restrictions are felt most strongly when a subcontractor has a legitimate dispute or claim for which the owner is the real party at fault. Although the privity doctrine will prevent subcontractors in many states from successfully suing an owner, a subcontractor may still seek compensation for owner-induced costs through its prime contractor in what is commonly known as a pass-through claim. While prime contractors and subcontractors routinely work with each other to submit pass-through claims to the owner, readers need to remember that this process can be far from simple and routine.The reality is that the permissibility of such claims and the legal requirements for proving entitlement depend on the jurisdiction.