Posted: February 26th, 2022

Subcontractor Case Briefs essay

42105: Development Contracts and Legislation Web page 1

Title: STUDENT NAME Date: February 11, XXXX

CMGT 42105: Development Contracts and Legislation

CASE BRIEF

Quotation: Interstate Contracting Company v. Metropolis of Dallas, Texas No. 03-0152

Case Info: On September 14, 1994, the Metropolis of Dallas and Interstate Contracting Company (ICC)

entered into a hard and fast sum contract for the development of levees round a Metropolis water therapy plant; the

excavation of two areas to create storm water detention lakes; and miscellaneous work together with trash

removing, surveying, and linear depth checking. ICC subcontracted Mine Companies, Inc. (MSI) to

excavate the storm water detention lake and assemble the levees. If it met the specs, the

excavated materials was for use to assemble the levees. After commencing work, Mine Companies, Inc.

found that a few of the supplies within the lakes differed from what it anticipated and couldn’t be

straight used to assemble the levees. MSI was due to this fact compelled to fabricate fill materials by mixing

sand with the restricted portions of clay which, in impact, decreased its productiveness and elevated its

prices. ICC knowledgeable the Metropolis of MSI’s extra prices however the metropolis refused to pay for MSI’s extra

prices. ICC filed go well with on behalf of MSI towards the Metropolis for breach of contract, quantum meruit, breach

of implied guarantee, and fraudulent inducement. The district courtroom allowed ICC to convey these claims

on behalf of MSI and a jury discovered that the Metropolis breached its contract with ICC. The jury additionally discovered

that the Metropolis breached an implied guarantee to supply correct and appropriate plans and specs

which have been inconsistent with the onsite circumstances. The Metropolis appealed to the Fifth Circuit, arguing that

the district courtroom erred in concluding that ICC might search and acquire damages on behalf of its

subcontractor as a result of there’s a lack of privity of contract between the Metropolis and MSI.

Authorized Concern (Question Assignment): Can a contractor assert a declare towards an proprietor on a subcontractor’s behalf

when there isn’t any privity of contract between the subcontractor and the proprietor?

Resolution (Reply): Sure.

The Supreme Courtroom held that, much like different jurisdictions, Texas would allow a contractor to pursue

claims on behalf of its subcontractor, offered the contractor stays liable to the subcontractor.

Follow Notes: A pass-through declare is a declare by a celebration who has suffered damages towards a

accountable occasion with whom it has no contract. The declare is offered via an intervening occasion

who has a contractual relationship with each. It’s important for the proprietor to know that the prime

contractor can get hold of damages on behalf of the subcontractor, who will not be in privity of contract with the

proprietor, via pass-through claims. The proprietor can, as established beneath the Severin doctrine, defeat

the subcontractor’s pass-through declare if he (the proprietor) proves that the contractor would “not be liable

to the subcontractor if it refused to current the pass-through declare or to remit the restoration to the

subcontractor.”

Subcontractors should concentrate on exculpatory clauses of their contracts with the prime which will deem

pass-through claims unenforceable. Clauses within the contract settlement just like the ‘no-damages-for-delays’

clause, although unenforceable in lots of states might preclude the final contractor from suing the proprietor

on behalf of the subcontractor. The sub should scrutinize the contract paperwork and be certain that they

account for the dangers which can be within the settlement together with such exculpatory clauses.

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Web page 1 of 42105: Development Contracts and Legislation

NAME OF STUDENT XXXXXXXXXXXXXXXXXXXXXXXX

Development Contracts and Legislation (CMGT 42105)

CASE STUDY

No. 03-0152 Interstate Contracting Company v. Metropolis of Dallas, Texas

The Metropolis of Dallas and Interstate Contracting Company filed a lawsuit on September 14, 1994. (ICC)

engaged right into a fixed-price contract to construct levees round a Metropolis water therapy plant;

excavation of two areas for storm water detention lakes; and different miscellaneous operations equivalent to garbage removing

eradicating, surveying, and measuring linear depth Mine Companies, Inc. (MSI) was employed as a subcontractor by ICC.

Construct the levees and excavate the storm water detention lake. If it met the necessities, the

The excavated materials was to be utilized to construct the levees. Mine Companies started working quickly after.

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