GC'S MUST "PASS-THROUGH" SUBCONTRACTOR CLAIMS IN GOOD FAITH
In March 2022, an Appellate court in New York held a general contractor liable for damages to its sub due to its failure to prosecute the subcontractor’s “pass-through” delay claim against the City in violation of the implied covenant of good faith. Ras & D’Aprile, Inc. v. Arnell Constr. Corp., 2022 NY Slip Op 1472 (2nd Dept. 2022).
The general contractor also failed to notify its sub that it had settled the delay claim.
Contractors are obligated to “pass-through” subcontractor claims in good faith for an owner’s determination pursuant to the covenant of good faith implied in every contract agreement. Not doing so runs the risk of having to compensate the subcontractor for its claim against the owner. To avoid this, contractors should present their subs’ claims to an owner in good faith and in compliance with the terms of any contract.
About the author: George Marco is an attorney practicing in the field of construction law. He also holds a Bachelor of Science in Mechanical Engineering and was previously employed as a Project Manager for a public improvement contractor.
Disclaimer: This article is for informational purposes only and not intended to serve as legal counsel.