In the 1973 case F. D. Rich Co., Inc., et al. v. United States for the Use of Industrial Lumber Co., Inc, the U.S Supreme Court ruled on a dispute involving payment bonds under the Miller Act (a federal law requiring contractors on government construction projects to provide bonds guaranteeing both completion of contract and payment for labor/materials). The issue was whether an unpaid supplier to a subcontractor could recover from a general contractor's surety bond when there was no direct contractual relationship between them. The court held that even in absence of any express agreement or privity between parties, if it can be shown that materials were supplied with reasonable belief they were intended for specified work, then such claimant is entitled to protection under Miller Act regardless of who ordered materials or agreed to pay for them. This decision expanded protections offered by Miller Act beyond those directly contracted with prime contractor, ensuring suppliers and sub-subcontractors are also covered against non-payment risks in federal construction projects.

In the dissenting opinion for F. D. Rich Co., Inc., et al. v United States for the Use of Industrial Lumber Co, Inc., Justice Douglas argued that a subcontractor should not be able to recover from a prime contractor under the Miller Act unless they have directly contracted with each other or if there is an implied contract between them due to their actions and conduct throughout their business dealings. He believed that this interpretation was more in line with Congress's intent when it enacted the Miller Act, which was designed to protect subcontractors by requiring prime contractors on federal projects to provide payment bonds guaranteeing payment for labor and materials supplied by subcontractors. However, he felt that extending this protection beyond those who had direct contractual relationships would go beyond what Congress intended and could potentially lead to unfair results.