A subcontractor agreement is a legal contract that defines the terms for how a subcontractor will go about providing work for a general contractor (or another subcontractor). It establishes important dates, compensation, the services that will be performed, and the obligations of both parties.
A subcontractor agreement is a legal contract that defines the terms for how a subcontractor will go about providing work for a general contractor (or another subcontractor). It establishes important dates, compensation, the services that will be performed, and the obligations of both parties.
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A subcontractor agreement is a legal contract that defines the terms for how a subcontractor will go about providing work for a general contractor (or another subcontractor). It establishes important dates, compensation, the services that will be performed, and the obligations of both parties.
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A subcontractor is a person or company hired by a contractor to provide specialized tasks. Subcontractors focus on a specific area of a much larger project, such as a marketing firm (contractor) hiring a writer (subcontractor) to write blog posts on a client’s website, or a general contractor hiring an electrician (subcontractor) to wire the lighting for a new house.
The major difference between a contractor and a subcontractor is who they’re in agreement with. Prior to hiring subcontractors, the contractor will enter into a formal agreement with the client (customer). Then, the contractor will enter into a sub-agreement with each subcontractor they hire. While the client is at the top in terms of hierarchy, the subcontractor’s duty is to the contractor that hired them, not the client.
Tax-wise, contractors and subcontractors are both viewed as self-employed. This means they’re responsible for deducting and paying their own taxes. There are two (2) important forms used by contractors, which are:
A subcontractor agreement is a legal form used for establishing a working relationship between a contractor and a subcontractor. Completing and signing the form is the last step that must occur before work can begin on a project. It covers the services the subcontractor will perform, how they’ll be compensated, insurance they’ll need to hold (if any), and how the agreement ends.
A standard section, that can be found at top of the first page of most agreements. It outlines the names and emails of both the contractor and subcontractor. Although optional, some agreements also include the name and address of the client.
This section specifies what duties and responsibilities the subcontractor will have. In addition to describing the service(s) the worker will provide, it should mention whether the subcontractor will be responsible for managing other workers (such as other contractors or employees), if they’ll need to provide materials, travel to the location (on their own), or they’ll need to provide their own tools.
An important provision, this section breaks down how and when the contractor is paid for their work. This section is highly variable and depends on the deal that was worked out between the two parties. Some are paid hourly, whereas others are paid in standard weekly installments. The parties can also write out custom payment terms if none of the standard payment options apply.
This section is straightforward, and simply includes the day, month, and year that the subcontractor will begin work.
Both “Completion” and “Termination” clauses refer to the event(s) that must occur in order for the agreement to end. The completion clause describes what must occur in order for the subcontractor to be declared finished with their services. This can be a specific date, upon the contractor deeming it done (in compliance with industry standards), or another condition of the parties choosing.
It’s important to understand that the “Termination” clause is not necessarily negative, but refers to conditions that result in the contract ending. If any of the events under the “Completion” clause occur, the contract will often terminate automatically. Alternatively, the parties can agree on a date that the agreement will end. This may be necessary if the contract includes a non-compete or non-disclosure clause, as the agreement would need to remain in effect for the clauses to remain binding. Alternatively, the contract can permit either party to terminate the agreement by providing written notice to the other.
This clause serves as a road map for reaching a resolution should a dispute arise between the parties. It outlines the process for how the parties should go about sorting out their differences, namely one (1) of three methods:
Mostly used in the construction industry, this section establishes the protocol to be followed if the client (or the contractor) requires a change to the services provided by the subcontractor.
Because the subcontractor is bound to provide services as written in the agreement, a formal change order acts as an amendment to the contract and provides guidance on the new services the subcontractor will be required to provide.
