Pass-through claims are claims by a party that has suffered damages but does not have a contractual relationship with the entity that caused the damages. In the construction industry, subcontractors commonly have claims for additional costs based on actions or inactions by the owner. However, since the subcontractor is not in privity of contract with the owner, it has no direct cause of action against the owner other than, perhaps, on a nongovernment project, a lien claim. In such cases, subcontractors may seek to pass the claim through the general contractor, who is in privity with the owner, to the owner.

Indeed, many construction contracts require the subcontractor, in such cases of owner-caused damages, to pass the claim through the general contractor to the owner. And since the harm visited on a subcontractor by the owner usually also affected the general contractor, the subcontractor’s claim is packaged together with the general contractor’s claim, which is usually greater, for presentation to the owner and, if not resolved, litigation with the owner.

Reprinted courtesy of Scott D. Cessar, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.