Contracts & ExecutionQuestion 546 of 1605
A subcontract contains a 'flow-down' clause stating the sub assumes toward the prime all obligations the prime owes the owner under the prime contract. The effect of this clause is that the subcontractor:
a.Is bound to the prime by the same scope, schedule, and quality terms the prime owes the owner, to the extent applicable to the sub's work
b.Becomes a direct party to the prime contract with the owner
c.May sue the owner directly for non-payment
d.Is released from any contract provisions not specifically repeated in the subcontract
Explanation
Flow-down (or pass-through) clauses incorporate the prime contract obligations into the subcontract to the extent they apply to the sub's scope. They do not create privity between sub and owner, but they do bind the sub to schedule, quality, indemnity, and dispute-resolution terms of the upstream contract.
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