{"id":901239,"date":"2023-05-31T12:10:14","date_gmt":"2023-05-31T18:10:14","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=901239"},"modified":"2023-05-31T12:10:17","modified_gmt":"2023-05-31T18:10:17","slug":"prime-contract-subcontractor-obligation","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/prime-contract-subcontractor-obligation\/","title":{"rendered":"Incorporation Clauses: Does the Subcontractor Really Assume All Obligations of the Prime Contractor?"},"content":{"rendered":"\n<p>John Mark Goodman | <a href=\"https:\/\/www.buildsmartbradley.com\/2023\/05\/incorporation-clauses-does-the-subcontractor-really-assume-all-obligations-of-the-prime-contractor\/?utm_source=Bradley+Arant+Boult+Cummings+LLP+-+BuildSmart&amp;utm_campaign=a52e13671a-RSS_EMAIL_CAMPAIGN&amp;utm_medium=email&amp;utm_term=0_b504caf31b-a52e13671a-78863422\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">BuildSmart<\/a><\/p>\n\n\n\n<p>Many subcontracts contain a catch-all provision requiring the subcontractor to do everything the prime contractor is obligated to do under the <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/know-your-obligations-under-both-the-prime-contract-and-subcontract\/\" target=\"_blank\" rel=\"noreferrer noopener\">prime contract<\/a>. This is known as an \u201cincorporation\u201d clause because it adopts or incorporates legal rights and duties spelled out elsewhere. Here is an example of an incorporation clause: \u201c<em>The Subcontractor shall be bound by the terms of the Specifications, General Conditions and Supplemental Conditions and Addenda in the Contract between the Contractor and the Owner, shall confirm to and comply with the Drawings and Specifications and Addenda, and shall assume toward the Contractor all the obligations and responsibilities that the Contractor assumes toward the Owner.<\/em>\u201d\u00a0<\/p>\n\n\n\n<p>This provision, and how broadly to read it, was explored by the Second Circuit in a decision released last week in\u00a0<a href=\"https:\/\/www.buildsmartbradley.com\/wp-content\/uploads\/sites\/34\/2023\/05\/AMERISURE-INSURANCE-COMPANY-AMERISURE-MUTUAL-INSURANCE-COMPANY-Defendants-Third-.pdf\" target=\"_blank\" rel=\"noreferrer noopener nofollow\"><em>Amerisure Insurance Company v. Selective Insurance Group, Inc<\/em>.<\/a>, 2023 WL 3311879 (2<sup>nd<\/sup>\u00a0Cir. 2023). The specific issue was whether the owner was an additional insured under the subcontractor\u2019s insurance policy.\u00a0The insurance policy did not name the owner as an additional insured, and the insurance provision in the subcontract required only that the prime contractor \u2013 but not the owner \u2013 be named as an additional insured.\u00a0That\u2019s where the incorporation clause came into play.\u00a0<\/p>\n\n\n\n<p>The plaintiff argued that the owner should nonetheless be deemed an additional insured under the subcontractor\u2019s insurance policy because (1) the prime contractor had an obligation under the prime contract to name the owner as an additional insured and (2) under the incorporation clause, the subcontractor had assumed all obligations and responsibilities that the prime contractor had to the owner. The Second Circuit rejected this argument.&nbsp;Under the law chosen by the parties (Virginia), incorporation clauses do not require subcontractors to assume&nbsp;<em>all<\/em>&nbsp;obligations of the prime contractor, only those relating to the nature or scope of the work undertaken.&nbsp;Because the insurance clause in the prime contract did not directly relate to the nature or scope of masonry work to be performed by the subcontractor, it was not incorporated into the subcontract and assumed by the subcontractor.&nbsp;The Second Circuit noted that it would have reached the same result under New York law since the insurance provision to be incorporated did not relate to the \u201cscope, quality, character, and manner of the work to be performed by the subcontractor.\u201d &nbsp;<\/p>\n\n\n\n<p>Here\u2019s the lesson for prime contractors and subcontractors alike: If there\u2019s an important obligation that you want to make sure is assumed by your subcontractor (or sub-sub), you should attempt to incorporate it expressly.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes &#8211; please call Advise &amp; Consult, Inc. at 888.684.8305, or email <a href=\"mailto:experts@adviseandconsult.net\" target=\"_blank\" rel=\"noreferrer noopener\">experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>John Mark Goodman | BuildSmart Many subcontracts contain a catch-all provision requiring the subcontractor to do everything the prime contractor is obligated to do under the prime contract. This is known as an \u201cincorporation\u201d clause because it adopts or incorporates legal rights and duties spelled out elsewhere. Here is an example of an incorporation clause:&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/prime-contract-subcontractor-obligation\/\">Continue reading <span class=\"screen-reader-text\">Incorporation Clauses: Does the Subcontractor Really Assume All Obligations of the Prime Contractor?<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[9],"tags":[9895,224,10308],"class_list":["post-901239","post","type-post","status-publish","format-standard","hentry","category-construction-contracts","tag-advise-consult","tag-construction-contract","tag-prime-contractors","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Incorporation Clauses: Does the Subcontractor Really Assume All Obligations of the Prime Contractor? - Advise &amp; Consult, Inc.<\/title>\n<meta name=\"description\" content=\"Many subcontracts contain a provision requiring the sub to do everything the prime contractor is obligated to do under the prime contract\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/prime-contract-subcontractor-obligation\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Incorporation Clauses: Does the Subcontractor Really Assume All Obligations of the Prime Contractor? - Advise &amp; Consult, Inc.\" \/>\n<meta property=\"og:description\" content=\"Many subcontracts contain a provision requiring the sub to do everything the prime contractor is obligated to do under the prime contract\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.myconstructionexpert.com\/blog\/prime-contract-subcontractor-obligation\/\" \/>\n<meta property=\"og:site_name\" content=\"Advise &amp; Consult, Inc.\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Advise-Consult-Inc-126949043996790\/\" \/>\n<meta property=\"article:published_time\" content=\"2023-05-31T18:10:14+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-05-31T18:10:17+00:00\" \/>\n<meta name=\"author\" content=\"admin\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@adviseconsult\" \/>\n<meta name=\"twitter:site\" content=\"@adviseconsult\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"admin\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/prime-contract-subcontractor-obligation\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/prime-contract-subcontractor-obligation\/\"},\"author\":{\"name\":\"admin\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#\/schema\/person\/0a11abe008083d5fb19c2b0feefe7bd7\"},\"headline\":\"Incorporation Clauses: Does the Subcontractor Really Assume All Obligations of the Prime Contractor?\",\"datePublished\":\"2023-05-31T18:10:14+00:00\",\"dateModified\":\"2023-05-31T18:10:17+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/prime-contract-subcontractor-obligation\/\"},\"wordCount\":474,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/#organization\"},\"keywords\":[\"Advise &amp; Consult\",\"Construction Contract\",\"Prime Contractors\"],\"articleSection\":[\"Construction Contracts\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.myconstructionexpert.com\/blog\/prime-contract-subcontractor-obligation\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.myconstructionexpert.com\/blog\/prime-contract-subcontractor-obligation\/\",\"url\":\"https:\/\/www.myconstructionexpert.com\/blog\/prime-contract-subcontractor-obligation\/\",\"name\":\"Incorporation Clauses: Does the Subcontractor Really Assume All Obligations of the Prime Contractor? 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