Sinclair Wyoming Refining sued multiple subcontractors and suppliers for breach of contract and negligence related to an EPC (Engineering, Procurement, Construction) contract. The appeals court upheld the dismissal of all claims, finding that Article 1.7 of the EPC Contract contained limitations that barred Sinclair's claims against the defendants. This case shows that broad contractual limitations and flow-down clauses can shield subcontractors from liability even when a project owner claims breach or negligence.
Ensure your subcontracts include clear limitation of liability clauses and indemnification provisions—they can be your strongest defense against claims from higher-tier contractors or project owners.
Understand how contractual flow-down clauses work: protections in the main EPC contract can extend down to protect subcontractors, but only if properly drafted and incorporated.
Document that your subcontract incorporates the prime contract's terms and limitations. Courts will enforce these protections if the language is clear and the flow-down is explicit.