Pay-if-paid clauses make a prime contractor’s payment to a subcontractor contingent on the prime contractor receiving payment from the project owner. A recent federal court case illustrates how the failure to include a pay-if-paid clause can end up with a prime contractor paying one of its subcontractors out of pocket.

In Phillips and Jordan, Inc. v. McCarthy Improvement Co., a prime contractor was awarded a design-build contract for the construction of a $31 million roadway project for the South Carolina Department of Transportation. The prime contractor, in turn, entered into a unit-price subcontract with a dirt-work contractor to excavate and place soil at the project.


Continue Reading Subcontractor Awarded $3.3 Million for Extra Work on a Roadway Project

In United States ex rel. Aarow/IET LLC v. Hartford Fire Insurance Company, an electrical subcontractor sued a general contractor and the payment bond surety for $2.9 million in additional labor costs incurred on a federal government project. The subcontractor alleged that the general contractor mismanaged the project and disrupted the subcontractor’s work. The general contractor filed a motion to dismiss, which the trial court granted because, among other reasons, the trial court believed that a no-damages-for-delay clause in the parties’ contract barred the subcontractor’s claim.

Continue Reading Court Concludes No-Damages-for-Delay Clause Did Not Bar Subcontractor’s Disruption Claim

Contractors and subcontractors that incur increased costs to complete their work due to delay or other impacts on a project sometimes have difficulty proving their damages. There are various ways to calculate those damages, but the surest way to have a claim rejected is by asserting a total cost claim.

Continue Reading Total Cost Claims—Frequently Rejected and Rarely Effective

The Florida Fourth District Court of Appeal recently held that a trial court properly apportioned a public owner’s damages among a program manager, engineering firm, and contractor. See Broward County, Fla. v. CH2M Hill, Inc., No. 4D18-3401 (Fla. 4th DCA July 22, 2020). In CH2M, a contractor agreed to construct an airport taxiway project for Broward County. After being used for about eight months, the taxiway started showing indentations in the surface. Ultimately, the County, the engineering firm that designed the project, the program manager that oversaw construction of the project, and the contractor that built the project went to trial over who was responsible for the defective taxiway.

Continue Reading Public Owner’s Damages Properly Apportioned Among Program Manager, Engineering Firm, and Contractor Under Comparative Fault Statute