Contractors vs. Subcontractor: Who is Responsible?
The construction transactional relationship between contractors and subcontractors can be quite complex when dealing with issues of negligence liability as well as injury to workers or third parties. Parties who seek to protect their interests can utilize a few legal strategies to avoid unwarranted liabilities. One way is by using a construction agreement to fairly and legally set responsibility in case of negligence or injury. Another way is to use insurance policies to limit the effect of the liability on the party.
All Subs and General Contractors Must Have Liability Insurance
The requirement of liability insurance for general contractors is common place in the industry. However, in the case of subcontractors, general contractors may feel inclined to have their insurance cover the subs as the sub is a hire of the general contractor. This decision may prove detrimental for the general contractor if a defect or injury occurs that is not contemplated or unforeseeable. It can create a huge financial burden of the general contractor. The clear fix here is to require all subcontractors to obtain liability insurance. Liability insurance covers the costs of lawsuits brought by third parties over property or bodily injury. Liability insurance can cover most lawsuits. Nevertheless, it does not cover all of them. The difference between covered incidents and those not covered can be situational.
Create Liability Through Contractual Agreements
General contractors who seek to seriously limit liability can do so via contract. Instead of passing liability coverage to the sub, the general contractor can create terms that will state the shared and separate liabilities. These terms can be based on the kinds of incidents in question. The parties can also base it on passing liability when there is a certain dollar amount or higher in question. These terms may be constructed narrowly to provide for less interpretation or they can be constructed widely for the opposite effect.
Case Study: Ormsby v. Capital Welding
Ormsby v. Capital Welding is an important case study into how general and subcontractor liability can create complex legal issues including the discussion of control and common work area rues. In Ormsby, a Michigan court held that an injured subcontractor who has already collected worker’s compensation for his injuries could not also sue the general contractor because the owner of the project was rightly in control of the common work areas. In other words, at the time Ormsby sustained injury, the owner had the onus to ensure the safety of the common work areas and of all contractors including the general and subcontractors. Cases such as Ormsby provides a glimpse into how the lack of a contractual agreement around liability and other legal strategies can create a complicated volley during liability lawsuits.
Contact Us Today for Help
Fort Lauderdale construction attorney Brendan Sweeney has years of experience advising clients on liability issues concerning general and subcontractors. Sweeney Law is highly experienced in the area of construction liabilities and will guide you through the contracting and claims processes. Contact us now for a consultation.