Essential Terms for a Subcontractor Agreement

Prime contractors often cannot carry out their work without the help of other construction companies who have the needed expertise of a project.  A prime contractor who does not have the manpower or expertise to install an electrical system in a new building structure will need to hire a subcontractor to fulfill this need. The hiring of the contractor requires an agreement to provide the services or goods required.  Given that the relationship between the contractor and the owner does not extend to the subcontractor, often, a separate contract is written to reflect the terms between the sub and the prime.  The following terms are terms that are essential to any subcontractor agreement.

Scope of Work

The scope of work term can be construed as the most important term in the subcontractor agreement.  Why is it so important?  It is crucial because it sets out the entire course of work for the subcontractor.  The scope of work term describes the work that is required of the sub, the party or entity that is responsible for completing it, the manner in which the work is to be performed, and the materials that must be used to complete it.  As it is evident, the scope of work term outlines the main purpose of the relationship between the contractor and the sub.  This term has other functions as well.  The term creates the objectives of the project and estimates the cost. Further, the term lays out the standards and regulations of the type of work being performed.  It also communicates the expectations of the prime as to the desired results.

Indemnification

An indemnification clause is essential to the subcontractor’s agreement with the prime.  With an indemnification clause, the contractor can be bound the sub to an agreement whereby the sub is responsible for the payment of any potential losses or damages by another party.  This is an important tool for the contractor if the sub or its hired third parties are the cause of certain losses. Should there be litigation as a result of the loss, the contractor can hail the sub into court as the party responsible for fulfilling a judgment.

Termination  

The “all important” termination clause sets out the terms for ending the contractual relationship between the prime and sub.  Primes should take care to reflect all the circumstances that will necessitate the ending of the contract.  In turn, the sub will ensure that the circumstances are lawful and reciprocal.

Fort Lauderdale Construction Law Attorney

Brendan Sweeney is a knowledgeable Fort Lauderdale construction lawyer with years of experience advising on terms for a subcontractor agreement. He is highly experienced in this area and is ready to guide you through the contract drafting and review stages. Contact us now for a consultation.

Resource:

investopedia.com/terms/i/indemnity.asp

https://www.sweeneylawpa.com/how-to-win-a-scope-of-work-contract-dispute/