By Hasti Hejazi, Education Director, AIA Contract Documents
November 2, 2022
Contract documents are the foundation of and roadmap to a successful construction project. A well-written contract can effectively define the scope of work, govern the parties’ obligations, budget, timeline and more.
No one will argue that thoroughly reviewing a construction contract before you sign and start any project is critical to protecting the health of the project and your business. But some provisions warrant meticulous attention to detail and careful analysis in order to fully understand your obligations and liabilities. Flow-down provisions in construction contracts are one such example.
Flow-down provisions legally bind the subcontractor to the general contractor in a similar manner as the general contractor is bound to the project owner. Also referred to as pass-through or conduit clauses, these powerful provisions apply the terms and conditions of the prime contract (entered between the GC and property owner) to the subcontractor and may include scope of work, timelines, payment, change orders and dispute resolution terms. In essence, flow-down provisions legally obligate the subcontractor to provide everything to the prime contractor that they in turn must provide to the owner, thus mirroring those obligations.
It is vital that subcontractors thoroughly review flow-down provisions within their subcontracts, as well as the prime contract so that they have a clear and full understanding of their role, responsibilities and obligations on the project. Likewise, flow-down provisions should be well-defined and drafted in unambiguous language so that the parties can have a clear grasp of what is required. Flow-down provisions that are too broad or vague can be deemed unenforceable.
Learn about flow-down provisions within AIA Contract Documents by viewing: Should I Go With the Flow? Understanding Flow-Down Provisions in Construction Contracts
AIA Contract Documents has provided this article for general informational purposes only. The information provided is not legal opinion or legal advice and does not create an attorney-client relationship of any kind. This article is also not intended to provide guidance as to how project parties should interpret their specific contracts or resolve contract disputes, as those decisions will need to be made in consultation with legal counsel, insurance counsel, and other professionals, and based upon a multitude of factors.