Construction Litigation
Construction Parties
The agreement acknowledges conditional liability to the subcontractor, assigns prosecution of the claim to the contractor, and limits the contractor's obligation to amounts actually recovered from the owner.
It enables pass-through claims where privity is absent.
Alternative Names:
Liquidation Agreement|Sponsorship Agreement
Why it Matters?
The agreement must acknowledge liability rather than disclaim it, since a document stating the contractor owes nothing defeats the pass-through claim under Severin and leaves the subcontractor without recourse. Conditional acknowledgment is the drafting solution. Cost allocation and settlement authority should also be addressed, because a contractor prosecuting a claim it will not retain has limited incentive to fund the effort.
Frequently Confused with
Related terms
Frequently asked questions
Why must liability be acknowledged?
What else should the agreement address?
