PDCA CONTRACTS & RISK COMMITTEE
As is the case with just about
every claim, the subcontractor
needs to vigilantly protect
its right to pursue a passthrough
conditions in its subcontract.
for your pipe and piling jobs Kahn Steel Co.
Offering NEW as well as USED
PIPE and BEAMS across the United States
36" x 1" Pipe in the Northwest
W36 x 282# Beams in the Northwest
NEW 79" x .500 x 20' Pipe in Southern Cali
NEW 18" x .250 Pipe in Houston
NEW PRIME API Pipe 36" x 1.75" x 55' in Hous ton
NEW 16" x .250 Pipe in Kansas City
Additional material available - too many sizes & locations to list
Check out more at
www.KahnSteel.com or call 1.800.828.5246
Kahn Steel Co.
1710 Southern Rd, Kansas City, MO 64120
claim for differing site
to be enforceable, a liquidation agreement must satisfy the following
three conditions:
1. The liquidation agreement must contain a clause that provides
for the imposition of liability upon the general contractor
for the subcontractor’s increased costs
2. The liquidation agreement must contain a requirement that
there is a liquidation of liability in the event of the general
contractor’s recovery against the owner
3. A provision that provides for the pass-through of the recovery
to the subcontractor
The Court also somewhat surprisingly ruled that the general
contractor must also take all reasonable steps to protect the
subcontractor’s right to eventual recovery.
The decision of the New York Court is in line with the
Severin doctrine (Severin v. United States, 99 Ct.Cl. 435 (1943))
that governs federal contracts. At the heart of the doctrine is
the issue of the general contractor’s liability to subcontractor.
The doctrine states that if the general contractor is not liable to
subcontractor for the damages that the subcontractor is claiming
from the owner, the general contractor cannot sue the owner.
An additional document that determines the liability of the
general contractor to the subcontractor is the progress payment
release. The subcontractor, by releasing the general contractor
periodically from, “…all the claims in connection with the Work
covered in this Payment Application,” is clearing the general
contractor from any liability. Such a release may later preclude
a pass-through claim against the owner.
stockstudio44 / 123RF Stock Photo
106 | ISSUE 4 2018
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