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Gulf Constr. Co., Inc. v. Self – Case Brief Summary (Texas)

In Gulf Constr. Co., Inc. v. Self, 676 S.W.2d 624 (Tex. App.-Corpus Christi 1984, writ ref'd n.r.e.), the court described the expectations in the construction business that the solvency of the owner is a credit risk to be borne by the general contractor, which burden is eased by mechanics liens and installment payments. Gulf Construction, 676 S.W.2d at 628.

The court said, "these evidence the intention of the parties that the contractor be paid even though the owner may ultimately become insolvent. This expectation and intention of being paid is even more pronounced in the case of the subcontractor whose contract is with the general contractor, not with the owner." Id.

Accordingly, in order to transfer this normal credit risk incurred by the general contractor to the subcontractor, "the contract between the general contractor and the subcontractor should contain an express condition clearly showing that to be the intention of the parties." Id. at 628-29.