The Limits of Third-Party Beneficiary Rights in New York

Bradley Arant Boult Cummings LLP

On complex construction projects, there may be multiple contractors, subcontractors, vendors, suppliers, and sub-subcontractors working along side one another. With various entities working parallel there are substantial risks that one contractor’s work will interfere with that of another contractor on the project. When the two parties have direct contracts with one another (e.g., owner and general contractor or general contractor and subcontractor), the non-interfering or non-breaching party can pursue whatever rights and remedies are available under the contract. However, it is trickier when two parties on the same job do not have contracts directly with one another (e.g., multi-prime projects or conflicts between different subcontractors). In those circumstances, lacking privity, a damaged party may attempt to pursue breach claims as a third-party beneficiary or common law tort claims.

Originally published by NASBP - September 21, 2023.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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