42105: Development Contracts and Legislation Web page 1
Title: STUDENT NAME Date: February 11, XXXX
CMGT 42105: Development Contracts and Legislation
CASE BRIEF
Quotation: Interstate Contracting Company v. Metropolis of Dallas, Texas No. 03-0152
Case Info: On September 14, 1994, the Metropolis of Dallas and Interstate Contracting Company (ICC)
entered into a hard and fast sum contract for the development of levees round a Metropolis water therapy plant; the
excavation of two areas to create storm water detention lakes; and miscellaneous work together with trash
removing, surveying, and linear depth checking. ICC subcontracted Mine Companies, Inc. (MSI) to
excavate the storm water detention lake and assemble the levees. If it met the specs, the
excavated materials was for use to assemble the levees. After commencing work, Mine Companies, Inc.
found that a few of the supplies within the lakes differed from what it anticipated and couldn’t be
straight used to assemble the levees. MSI was due to this fact compelled to fabricate fill materials by mixing
sand with the restricted portions of clay which, in impact, decreased its productiveness and elevated its
prices. ICC knowledgeable the Metropolis of MSI’s extra prices however the metropolis refused to pay for MSI’s extra
prices. ICC filed go well with on behalf of MSI towards the Metropolis for breach of contract, quantum meruit, breach
of implied guarantee, and fraudulent inducement. The district courtroom allowed ICC to convey these claims
on behalf of MSI and a jury discovered that the Metropolis breached its contract with ICC. The jury additionally discovered
that the Metropolis breached an implied guarantee to supply correct and appropriate plans and specs
which have been inconsistent with the onsite circumstances. The Metropolis appealed to the Fifth Circuit, arguing that
the district courtroom erred in concluding that ICC might search and acquire damages on behalf of its
subcontractor as a result of there’s a lack of privity of contract between the Metropolis and MSI.
Authorized Concern (Question Assignment): Can a contractor assert a declare towards an proprietor on a subcontractor’s behalf
when there isn’t any privity of contract between the subcontractor and the proprietor?
Resolution (Reply): Sure.
The Supreme Courtroom held that, much like different jurisdictions, Texas would allow a contractor to pursue
claims on behalf of its subcontractor, offered the contractor stays liable to the subcontractor.
Follow Notes: A pass-through declare is a declare by a celebration who has suffered damages towards a
accountable occasion with whom it has no contract. The declare is offered via an intervening occasion
who has a contractual relationship with each. It’s important for the proprietor to know that the prime
contractor can get hold of damages on behalf of the subcontractor, who will not be in privity of contract with the
proprietor, via pass-through claims. The proprietor can, as established beneath the Severin doctrine, defeat
the subcontractor’s pass-through declare if he (the proprietor) proves that the contractor would “not be liable
to the subcontractor if it refused to current the pass-through declare or to remit the restoration to the
subcontractor.”
Subcontractors should concentrate on exculpatory clauses of their contracts with the prime which will deem
pass-through claims unenforceable. Clauses within the contract settlement just like the ‘no-damages-for-delays’
clause, although unenforceable in lots of states might preclude the final contractor from suing the proprietor
on behalf of the subcontractor. The sub should scrutinize the contract paperwork and be certain that they
account for the dangers which can be within the settlement together with such exculpatory clauses.
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Web page 1 of 42105: Development Contracts and Legislation
NAME OF STUDENT XXXXXXXXXXXXXXXXXXXXXXXX
Development Contracts and Legislation (CMGT 42105)
CASE STUDY
No. 03-0152 Interstate Contracting Company v. Metropolis of Dallas, Texas
The Metropolis of Dallas and Interstate Contracting Company filed a lawsuit on September 14, 1994. (ICC)
engaged right into a fixed-price contract to construct levees round a Metropolis water therapy plant;
excavation of two areas for storm water detention lakes; and different miscellaneous operations equivalent to garbage removing
eradicating, surveying, and measuring linear depth Mine Companies, Inc. (MSI) was employed as a subcontractor by ICC.
Construct the levees and excavate the storm water detention lake. If it met the necessities, the
The excavated materials was to be utilized to construct the levees. Mine Companies started working quickly after.
