Typical subcontracts between the Subcontractor and the Prime Contractor include an incorporation provision of the Prime Contractor’s Prime Contract. The typical provision would read as follows: “The contract between Contractor and the Owner is hereby incorporated into and made a part of this Agreement by reference. Subcontractor assumes toward Contractor all of the obligations and responsibilities contained in the Prime Agreement that Contractor assumes towards the Owner as they relate to Subcontractor’s performance of work. In the event of the conflict between any provision of this Agreement and the Prime Contractor the more restrictive provision shall govern”. One would assume that in the event of the conflict between the provisions of the Subcontract and the Prime Contract, the provisions of the Prime Contract would apply. However, that may not always be the case. In Remedial Construction Services, LP v. AECOM, Inc., the subcontractor brought the sui California, however, the Prime Contractor moved to compel the arbitration in Texas where the project owner is based, arguing that the terms of the prime contract controlled the dispute resolutions between the parties. The trial court denied the motion to compel, and the California Court of Appeal affirmed. The court’s concluded that the subcontractor only assumed the provisions of the prime contract that directed related to the subcontractor’s scope of work. Furthermore, the dispute resolution provision in the subcontract required litigation in court and took precedence over the prime contract.
In conclusion, when signing subcontracts, both the subcontractor and the prime contactor has to make sure that are no significant inconsistencies between the subcontract and the prime contact, especially as it relates to the