Contracts

Flow-Down Clause

Also known as: Pass-Through Clause

A clause incorporating the prime contract's obligations into the subcontract, binding subs to upstream owner requirements.

A flow-down clause is the standard mechanism by which the GC pushes prime contract obligations downstream to its subcontractors. The typical wording: "Subcontractor agrees to be bound to Contractor by all terms of the Prime Contract that apply to Subcontractor's scope of work, to the same extent that Contractor is bound to Owner." Flow-downs commonly cover: dispute resolution, indemnification, insurance, schedule, payment terms, and notice requirements.

Flow-down clauses are often broader than they appear. A sub signing without reading the prime contract may discover months later that it agreed to mandatory arbitration, broad indemnification, or onerous notice deadlines it never explicitly accepted. Best practice: insist the GC provide the prime contract before subcontract execution, identify which prime contract clauses flow down, and negotiate carve-outs for any term that materially shifts risk to the sub.

Frequently asked questions

What does a flow-down clause typically cover?+

Dispute resolution method (arbitration vs court), indemnification, insurance requirements, payment terms, schedule and delay claim procedures, notice and cure requirements, change order procedures, and dispute escalation. The exact list depends on the wording.

Should subs ask for the prime contract before signing?+

Yes, always. A flow-down clause is unenforceable as to obligations the sub did not have a reasonable chance to review. Demanding the prime contract is reasonable and protects the sub from surprise obligations.

Can subs negotiate flow-down terms?+

Some terms yes, some no. Insurance and indemnification flow-downs typically must remain because the GC needs them to back up its own obligations to the owner. Dispute resolution and notice deadlines are sometimes negotiable. Read each clause carefully.

Related terms