Flow-down Provisions in Subcontracts
Flow-down provisions are clauses in a subcontract that incorporate the general contract by reference, and binds the subcontractor to the general contractor in the same way the general contractor is bound to the owner. Flow-down provisions are common in most subcontract forms, and regardless of its mild language, flow down clauses account for one of the more potent provisions in a subcontract, which is why it’s recommended to seek the counsel of a construction attorney in Brandon when it comes to understanding these provisions.
What is the Purpose of a Flow-down Provision?
The main purpose of a flow-down provision is to retain regularity between the responsibilities that the subcontractor owes to the general contractor for sub-trade work, and the responsibilities that the general contractor owes to the owner. This purpose is realistic, because there are no general contractors that want to chance liability to the owner due to non-conforming sub-trade work without having the ability to pass that liability on to the subcontractor’s responsibility.
Flow-down provisions tend to only benefit the general contractor. The subcontractor is required to assume the general contractor’s responsibilities to the owner, but the general contractor is not required to assume to the subcontractor the responsibilities which the owner owes to the general contractor.
Overlooking Flow-down Provisions
As mentioned earlier, incorporating the general contract into the subcontract with a flow-down provision will bind the subcontractor to the agreement made between the general contractor and owner. This can sometimes lead to startling results. An example of this would be a subcontract that does not provide for arbitration of disputes. This can be an issue if the general contract requires arbitration, because the subcontractor could be facing the situation of arbitrating its claims and disputes with the general contractor.
Flow-down provisions in subcontracts inflict several obligations on a subcontractor beyond what they signed up for. A subcontractor that accepts a flow-down provision without first procuring a complete copy of the general contract is acquiring not only extra obligations, but also potentially opening themselves up to blind liability.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.