AIA 201 Document: Flow Down Provisions

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September 22, 2015

Flow down provisions, which are also called pass-through or conduit clauses, are a common feature in construction contracts, and are included in the A201 at §5.3. Pursuant to §5.3, the Contractor must include provisions in its subcontracts that require the subcontractors, and their subcontractors, “to be bound to the Contractor by the terms of the Contract Documents, and to assume toward the Contractor all the obligations and responsibilities . . . which the Contractor, . . ., assumes toward the Owner and Architect.” The purpose of flow down provisions is to try to ensure that the subcontractor's obligations under their subcontract mirror  the Contractor's obligations to the Owner. This helps reduce the risk of potentially differing obligations on the part of the Contractor.

The difficulty in enforcement of flow down provisions is often how they actually are applied to the lower tier parties. The first thing to notice is that a flow down provisions creates a similar set of obligations between the Contractor and the subcontractors, as those between the Owner and the Contractor. However, the flow down provision does not create any right on the part of the Owner to directly deal with or control the work of the subcontractors. Likewise, the flow down provision does not create any third party beneficiary rights on the part of the subcontractors against the Owner. The contractual obligations are still between the Owner- General Contractor, and the General Contractor Subcontractor. There can also be practical issues in trying to determine which contractual obligations will actually flow down. If a court
finds that the flow down provision is ambiguous in relation to the obligation the Owner or General Contractor is seeking to enforce against the subcontractor, the Court is likely to follow traditional contract interpretation principles and look to evidence of the parties' intent to determine which obligations flow down.

The effect of an order of preference clause should also be considered when looking at a flow down provision. An order of preference provision should help clarify the documents that will govern any inconsistencies.

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