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Liquidating agreements for contractors and subcontractors

On Behalf of | Nov 22, 2021 | Construction Litigation

Massachusetts contractors are restricted from making claims against a project owner on behalf of a subcontractor. In construction litigation, an active party that has strict contractual ties can’t make claims beyond the scope of their contract. Most contractual clauses disable subcontractors from suing the owners of their projects.

The relationships involved

Liquidating agreements are what subcontractors can use to hold the owners of their projects liable. The typical subcontractor doesn’t directly answer to the owner of a project. Since these professionals deal with general contractors, they have no way to hold the owner of a project liable. Using an agreement is how subcontractors overcome these factors.

As a type of settlement

The liquidating agreement, though can be signed before an incident, is a type of settlement for construction disputes. Settlements are typically reached as the last result before taking action against a person or entity in court, but subcontractors have the right to use a liquidating agreement prior to a dispute. Relying on this agreement is a smart strategy in construction litigation.

Placing liability on the owner

Overall, a liquidating agreement is designed to place liability on the owner. Holding the owner of a construction project accountable is difficult. If a subcontractor is legally bound to their contracts with a general contractor, then their complaints must be with that contractor. Due to the wide range of disputes in construction, project owners don’t always have direct liability.

Construction litigation in Massachusetts

Deciding who’s responsible for work errors is essential when solving construction disputes. Not all subcontractors are at fault for the damages or losses they incur. Organizing a liquidating agreement can, instead, allow subcontractors to recoup their damages.