General Contractors Must Be Careful Not to Waive a Subcontractor’s Partial Release of Claims
Subcontracts typically require subcontractors to execute and submit to the general contractor a partial release of liens and claims form (“Partial Release”) as a condition to receipt of a progress payment. While the specific language of the Partial Release form varies from subcontract to subcontract, a properly drafted Partial Release will operate in most jurisdictions as a bar of all claims the subcontractor may have against the general contractor through the period of the application for payment that the Partial Release is being submitted in conjunction with (as long as the subcontractor receives the full amount of that progress payment). These Partial Release forms often allow the subcontractor to reserve any claims that it does not intend to release, however, if the subcontractor does not identify such claims on the form, those claims will be released upon receipt of the progress payment.
This article is not about the enforceability of a Partial Release against a subcontractor. This article assumes the subcontractor has executed a Partial Release that is enforceable by the general contractor as a bar to the subcontractor’s claims. The focus of this article is on the contractor’s words and/or conduct after the subcontractor executes that enforceable Partial Release. Some of you may be wondering why this would be the subject of an article. The reason is that a contractor holding an otherwise enforceable Partial Release in its hands can waive the release by its words or conduct.