A construction subcontractor agreement is a document used by contractors to outsource a portion of construction work to a subcontractor. It details essential aspects of the working relationship, including project deliverables, payment conditions, due dates, and whether the contractor will reimburse the subcontractor for materials and labor. If issues arise from the subcontractor’s performance (e.g., delayed or defective work), the agreement ensures that the subcontractor, and not the contractor who hired them, will be held accountable for their actions.
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What is a Subcontractor in Construction?
A subcontractor in construction is a self-employed person or business that’s hired by a contractor, usually a general contractor, to perform a specific task in contribution to a larger construction contract. Subcontractors often provide unique, specialized skills that general contractors can utilize to increase productivity and mitigate risk. For example, if a general contractor is hired to renovate an office building, they might bring in a plumber (the subcontractor) to install new plumbing fixtures and pipe systems, allowing the general contractor to focus on other aspects of the construction project.
Subcontractors are liable to the general contractor only and have no direct involvement with the client. That said, the subcontractor will want to review the prime contract (the agreement between the client and the GC) to verify whether subcontracting is permitted and to ensure there aren’t any conflicting provisions between the two agreements.
A section that properly identifies the parties is a crucial component of a construction subcontractor agreement. If the agreement doesn’t include the correct legal names and addresses of the contractor and subcontractor, it could prove difficult for either party to enforce it against the other following a contract violation.
This portion of the agreement describes the construction services the subcontractor will provide to the contractor in exchange for payment. It is essential that the services be described in detail, as the subcontractor will only be responsible for completing the work explicitly stated in the agreement.
Construction subcontractor agreements list the expenses the subcontractor will be responsible for while performing their services. Materials, equipment, and transportation costs are typically apportioned to the subcontractor. The contractor must reimburse any service expenses not listed in the agreement.
Payment provisions dictate how much and by what means the contractor will compensate the subcontractor. There are several payment structures available in this agreement. Most often, the contract will either designate a fixed fee to be paid upon completion of the construction services or an hourly rate with payments made weekly, monthly, or quarterly.
An indemnification clause protects the contractor and client from any loss or liability due to the subcontractor’s performance. In other words, the subcontractor will be financially responsible for issues arising from their services, such as personal injury or property damage.
The agreement’s termination clause indicates whether the parties can end the working relationship before the original termination date. If early termination is permitted, the clause will specify how the contractor or subcontractor must end the agreement, including the applicable notice requirements.
CONSTRUCTION SUBCONTRACTOR AGREEMENT
1. THE PARTIES. This Subcontractor Agreement (the “Agreement”) is made between [CONTRACTOR NAME] with a mailing address of [CONTRACTOR ADDRESS] (the “Contractor”) and [SUBCONTRACTOR NAME] with a mailing address of [SUBCONTRACTOR ADDRESS] (the “Subcontractor”).
WHEREAS, the Contractor intends to pay the Subcontractor for Services provided, effective [MM/DD/YYYY], under the following terms and conditions:
2. THE CLIENT. The Subcontractor acknowledges that any work performed under this Agreement must be in accordance with the latest version of the agreement made between the Contractor and [CLIENT NAME], who has a mailing address of [CLIENT MAILING ADDRESS] (the “Client”).
3. SERVICES & RESPONSIBILITIES. The Subcontractor agrees to perform and be responsible for the following: [LIST SERVICES AND RESPONSIBILITIES] (hereinafter the “Services”).
The Subcontractor shall not be responsible for any aforementioned items that are not selected unless otherwise stated in this Agreement.
4. LOCATION. The primary location for the Services completed by the Subcontractor shall be [ADDRESS].
5. START & END DATES. The Subcontractor shall be permitted to begin the Services on [MM/DD/YYYY] and shall complete the services in a reasonable time period in accordance with industry standards.
6. PAYMENT AMOUNT. Payment for the Services shall be as follows: [COMPENSATION (e.g., $30/hr)]. Payment shall be made by the Contractor to the Subcontractor as follows: [PAYMENT FREQUENCY (e.g., weekly paid on Friday)].
Completion shall be defined as the fulfillment of Services as described in Section 3 in accordance with industry standards and to the approval of the Contractor, not to be unreasonably withheld.
7. TERMINATION. During the course of this Agreement, either party can terminate this agreement by providing [#] days’ notice to the other party.
8. SUBCONTRACTING. The Subcontractor shall (☐ Have | ☐ Not Have) the right to Subcontract, either in part or in whole, the Services authorized under this agreement.
9. RESOLUTION OF DISPUTES. If a dispute arises concerning the provisions of this Agreement or the performance of any of the parties mentioned, the parties hereby agree to settle the dispute by equally paying for binding arbitration as regulated under the laws in the state where the Services are being performed.
10. ASSIGNMENT. The Subcontractor shall not have the right to assign any rights under this Agreement or any part of the Services issued herein. Subject to the foregoing, this Agreement shall be binding upon the parties’ heirs, executors, successors, and assigns.
11. REQUIRED LICENSES. All parties of this Agreement, including, but not limited to, the Contractor, the Subcontractor, other subcontractors, and all parties’ direct or indirect employees and agents, shall be licensed in accordance with respective state laws where the individual is performing their trade or service. All individuals under this agreement shall be regulated by their respective licensing board, which has jurisdiction to investigate complaints made by any third (3rd) parties.
12. INDEMNIFICATION. The Subcontractor shall indemnify and hold the Contractor and Client harmless from any loss or liability from performing the Services under this Agreement.
13. NOTICES. All notices under this Agreement shall be in writing and shall be deemed delivered when delivered in person or deposited in the United States Postal Service via Certified Mail with return receipt to the addresses listed in Section 1.
14. SEVERABILITY. If any term, covenant, condition, or provision of this Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remainder of the provisions shall remain in full force and effect and shall in no way be affected, impaired, or invalidated.
15. INDEPENDENT CONTRACTOR. No term, covenant, condition, or provision of this Agreement shall be considered to create an employer and employee relationship. All parties to this Agreement attest that the relationship between the Contractor and the Subcontractor shall be recognized as the Subcontractor acting as an independent contractor.
16. GOVERNING LAW. This Agreement shall be governed under the laws in the State of [STATE].
17. ADDITIONAL PROVISIONS.
[LIST ANY ADDITIONAL PROVISIONS HERE (OPTIONAL)].
IN WITNESS WHEREOF, this Agreement was signed by the parties under the hands of their duly authorized officers and made effective as of the undersigned date.
Contractor Signature: _____________________ Date: [MM/DD/YYYY]
Print Name: [CONTRACTOR NAME]
Subcontractor’s Signature: _____________________ Date: [MM/DD/YYYY]
Print Name: [SUBCONTRACTOR NAME]