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Agreement Pattern

Free Subcontractor Agreement Template

by stacy

Often, clients have projects that are highly complex – elements of which your company may not have the skills or resources to complete on time or within the budget. However, because you (the general contractor) do not want to lose out on such a profitable opportunity, you employ a professional independent vendor, often known as a subcontractor, to assist you with the project. While this is a wise decision, it is also vital to formalise this partnership by having both sides sign off on a complete and legally binding subcontractor agreement before moving forward.

Now, if you’re just looking for the free printable template, you can get it right here: link. However, I would encourage that you continue reading in order to gain a better grasp of the agreement and what each condition in the contract represents.

Why do you need a subcontractor agreement?

According to the terms of the original work agreement between you and your client, you are liable to the client. However, it has absolutely nothing to do with the subcontractor that you ultimately hire. In this situation, the use of a subcontractor agreement becomes necessary. This contract can protect you from any liability that may arise as a result of the work performed on the project by an independent third party.

Consider the following scenario: you have been granted a large-scale building construction project with a broad scope of work to complete. Tile installation is one of the construction jobs with which you have been charged that is outside the scope of your company’s core expertise. As a result, you hire a subcontractor (let’s say, Jack) to assist you with the necessary labour and tools. But what happens if Jack does not provide high-quality services or does not adhere to deadlines? You’ll need legal recourse if you want to hold them accountable for the areas of disagreement you’ve identified.

Putting your signature on the subcontractor agreement defines the parameters of your working relationship with Jack, removing any potential for misunderstanding about what is expected of each party. Having a well-drafted contract in place might also help you save money on your insurance premiums. Conversely, it can assist subcontractors in protecting their interests and avoiding potentially complex conflicts involving issues such as payment failures and scope of work, among others.

Now that you see how crucial this contract is, continue reading because we have prepared for you a full section-by-section breakdown of the most significant terms that you must include.

In full candour, this is a 7-minute read that is densely packed with legal jargon. However, it is critical that you fully comprehend the terms of the agreement that you are proposing and signing.

Pro tip: Before you begin working with a subcontractor, double-check that your agreement with the customer permits you to outsource a portion of your contractual obligations to a third party. If you fail to do so, the client may simply file a lawsuit against you for the losses caused by the subcontractor.

How to write a subcontractor agreement?

A typical subcontractor agreement must be concise and easy to understand while also complying with any state legislation. Also included should be everything from the scope of the task, timeframes, and payment terms to the parties’ duties, as well as the means of termination

But, before we get into all of that, it’s vital to introduce the many parties participating in this collaboration and the reasons for their association in an open and transparent manner. It should also include a reference to the start date of the agreement.

Define the specifics of the job

Specify the specifics of the position.
This is critically crucial! You begin by providing a general outline of the work that will be required of the subcontractor at the beginning of the contract. Also, make it clear what the subcontractor’s expectations are for the amount of work that will be delegated within the agreed-upon time frame for the project.

Please keep in mind that from this section onwards, you will find frequent references to ‘Task Orders.’ There are smaller contracts that contain all the specifics (e.g., scope, cost and timeline) of each single project that is assigned to the subcontractor, and these contracts are referred to as “subcontracts.” A subcontractor agreement is often raised after the signing of the contract with the subcontractor.

Then, not only will you explain the important items that must be included in a task order for each project, but you will also specify how to deal with any revisions to the task order that may occur. Explicitly stating the term or duration of the agreement should be included in this part, as well.

Elaborate on the Compensation

What services or items are you paying the subcontractor for, and how much are you paying them? If employees of the subcontractor work extra, does the contractor have to account for such time on his books? During the course of providing the service, who is responsible for paying for incidental expenses? This section provides comprehensive solutions to all of these topics and more.

You may also include information about who is responsible for paying the GST, HST, or any other similar transaction taxes in your document. After that, a clause describing the payment terms will be included to neatly close out this section of the agreement.

Set basic limitations on the Subcontractor

Do you recall Jack, the subcontractor? If they discover new business opportunities as a result of their engagement with your client, what happens next? You wouldn’t want them to take your client away from you in such a situation. Thus, you specify how much access the subcontractor has to the customer and prohibit them from pursuing new RFPs with the client during the term of the agreement in this section.

It would also be prudent to include a provision that prohibits the subcontractor from delegating any of the jobs mentioned in the Task Order to another subcontractor in the future.

Outline the confidentiality, IP and non-compete clause

When you begin working with a subcontractor, there will be a significant amount of interchange of proprietary or/and confidential information, as well as the development of new processes and services/goods. It is critical that clear guidelines are established regarding how the subcontractor may use and distribute this information. Furthermore, you must specify who has ownership rights to the project knowledge and output (the client, the contractor, or a subcontractor).

As an additional precaution, particularly in highly competitive sectors, make sure to include a non-compete clause that prohibits the subcontractor from working with direct competitors of the client for a specified length of time.

Mention clauses that safeguard you from liabilities

Jack must show up on time and complete the tiling for the new home project that you are working on, or you will be out of a job for a long time! Even the most dependable subcontractors may fail to fulfil their obligations on a consistent basis. In addition, there could be contract violations in the form of damages due to negligence, legal fees, and other expenses.

Consequently, in this section, you must define who is accountable for delays and defaults, as well as the procedures by which either party can cancel the contract. Additionally, the vast majority of contractors include an insurance clause, which holds subcontractors responsibility for maintaining comprehensive insurance coverage.

Pro tip: Consider include a licencing clause in the contract that validates that the subcontractor is properly licenced to undertake work in the state where the contract is being executed.

Make note of these general, yet essential provisions

Listed here are a slew of legal phrases that are not only universally applicable throughout agreements, but are also critical to the overall structure of the document. Among the questions that must be addressed in this part are the following:

The interpretation and execution of this agreement are governed by the laws of which state?
What are the thresholds beyond which no party is liable for damages in the event of a dispute?
What happens if a couple of the provisions of the agreement are found to be unenforceable?
Do both parties agree that the deal is full and final? Do both parties agree that the contract is final?
What methods will both parties use to communicate with one another about issues related to this agreement?
Tip of the day: If you’re looking for a way to save money, consider donating to a good cause. It is critical to include a typical dispute resolution provision in this contract. In order to provide a more economical alternative to going to court, the clause must declare that disagreements will be resolved by a neutral and non-binding mediator or arbitrator rather than going to court.

Make your contract legally binding with eSignatures

This attestation section of the contract is, in my opinion, the most important section of the contract. Why? Because if the document is not signed by both parties, the contract will be deemed invalid in court and would be terminated.

If you are apprehensive about exchanging tangible documents for the signature in today’s increasingly feverish world, it’s logical that you would be. This is why I would propose using an eSignature solution, which allows both parties to accept the contract without having to touch high-contact surfaces such as pens, papers, printers, or employees’ tablets, among other things. In addition, the document approval workflow is expedited as a result of this.

Final Word

That’s all there is to it. You are now fully prepared to use the downloadable and free subcontractor agreement template that you have just downloaded. Obtain a template by clicking here.

If you work with customers in the construction or information technology industries, you will find yourself using this template on a regular basis because each project has a unique set of needs that are typically complex.

Alternatively, you could keep this contract form within your Signeasy account and utilise it anytime you onboard a new subcontractor in the future. Consider how many man-hours you’ll save by not having to prepare a new contract every time! This useful blueprint may be customised and digitally signed before being shared with the subcontractor, and it can be done at any time and from any location.

Pro Tip: Each agreement is unique, since each clause must be adapted to meet the needs of the specific conditions and legislation in each jurisdiction. Because of this, it is recommended that you seek legal advice from a lawyer before utilising this subcontractor agreement template.

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