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Prime Contract's Adr Provision Can't 'flow Down' To Subcontract Without Explicit Instruction

Thursday, September 04, 2008 03:42 pm


Thanks to ambiguous contract language, a subcontractor found support for its refusal to engage in dispute resolution.

Hill International, Inc. (Hill) hired Beys General Construction Corp. (Beys) as the general contractor on a series of construction projects Hill was managing for the City of New York Department of Design and Construction (DDC). Beys posted a payment bond from Federal Insurance Company (Federal). Beys then subcontracted with Industrial Window Corp. (IWC) for installation of a curtain wall system. IWC's installation method -- and a change order for the increased contract price that method involved -- ultimately led to subcontractor allegations against Bey for contract breach and failure to pay for work, labor and materials.

After a New York City agency rejected IWC's initial installation plan, it had to use a more costly alternative method. As a result, Hill submitted a change order request for $111,000 to DDC, which DDC denied. Hill then asked IWC, via Bey, if the subcontractor wished to further pursue the change order claim, in which case Hill would submit it to the DDC Commissioner's office for review. IWC responded that it was "not obligated to and will not participate in th[e] dispute resolution process."

Hill submitted the change order request anyway and the Commissioner denied it. Hill then asked IWC if it would [...]

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