Construction Subcontractor Agreement Template
A construction subcontractor agreement is a formal, legally binding agreement between a contractor and subcontractor for a construction project. It is a great way to boost your business as a contractor or subcontractor. Contractors, sometimes referred to as general contractors, utilize construction subcontractor agreements to protect themselves and the subcontractors they hire.
A thorough construction subcontractor agreement is an indispensable part of your business. It leaves little room for confusion with what is expected of both parties to the contract. However, a construction subcontractor agreement is the most common use of a subcontractor agreement. It is absolutely necessary for construction projects. Without a written agreement in place, the terms agreed to may not be enforceable. Hiring a subcontractor can mitigate project risks while reducing costs.
What is in the Construction Subcontractor Agreement Template?
- Fillable sections to detail services to be performed and a section to fill in about who will provide the materials necessary for the construction project.
- Option to customize based on the type of construction project and time constraints.
- Room to include compensation, payment terms, and competition deadlines.
- Clear, concise, and easy to understand language
- Remedies in the event of a breach
Important Terms in a Construction Subcontractor Agreement:
- Contractor – An individual or business that hires a subcontractor to help with a construction project.
- Subcontractor –Subcontractors are individuals or businesses that are awarded a part or all of an existing construction contract to perform the obligations of a contractor’s agreement with another.
Difference Between Contractor and Subcontractor
Contractors work to obtain and complete contracts. Construction contractors hire subcontractors when they need help with a job or project. The contractor oversees the entire construction operation. Subcontractors only work on a contractual basis under the general contractor.
Who Can Benefit from Using a Construction Subcontractor Agreement?
A construction subcontractor agreement spells out clear and legally applicable language to clarify which party is responsible for what task. The contract details the scope of work and what is expected under the contract
What are the Important Elements of a Subcontractor Agreement?
A construction subcontractor agreement may vary based on the contractor’s needs and project. However, here are a few basic sections to a construction subcontractor agreement:
- Parties to the agreement – who is the general contractor and who is the subcontractor
- Effective Date – the date the contract is to become effective
- Scope of Work – This part of the agreement is essential. This contract provision clearly defines the general contractor’s expectations of the subcontractor and their work product on the construction site. If the general contractor is not satisfied with the subcontractor’s work, the agreement should include whether or not the subcontractor is responsible for making revisions to the project manager’s satisfaction.
- Construction Materials and Equipment – This is another major component to a construction subcontractor agreement. Depending on the project and job site, a subcontractor may be required to furnish their own materials and equipment. There may be some projects where the general contractor provides the equipment and the subcontractor is responsible for the materials. Whatever the agreement is, it should be detailed in the agreement.
- Completion Date – It is essential to explicitly state the construction project’s deadline. If there is not a “deadline,” the contract should specify that the work is performed on an “as needed” basis.
- Compensation – The payment structure should explicitly state if the pay is on a set at an hourly rate and how many hours should be dedicated each week or month to the project.
- Indemnification Clause – An indemnity clause establishes which party would be responsible for providing compensation for a loss, damage, or injury arising from the project. This clause protects the general contractor from being sued if the subcontractor made a mistake “hold harmless.” States have different laws on indemnification clauses and their reach. It is important to seek legal advice about your state’s rules and local laws on indemnification provisions.
- Warranty – A warranty provision is a subcontractor’s guarantee of quality work provided on the construction site and that the services are free from certain defects due to faulty workmanship for a certain period of time after the completion of the project.
- Assignment Provision – This provision determines whether a subcontractor is permitted to assign their responsibilities under the agreement to another party. Construction subcontractor agreements usually restrict subcontractors from assigning their agreement to outside parties.
Common Mistakes to Avoid when Drafting a Construction Subcontractor Agreement
A construction subcontractor agreement should be detailed. The construction subcontractor agreement should be presented before the subcontractor begins work on the construction project. This ensures that the parties have reviewed the scope of the contract and have agreed to its terms. Here are a few common mistakes found in construction subcontractor agreements:
- Scope of Work, Services, and Materials – The services that the subcontractor is to perform should be clearly defined. It should be as unambiguous as possible. If the general contractor is responsible for providing any materials or equipment, it should be included in the agreement to avoid a potential dispute down the road.
- Deadlines – Contractors should be mindful of deadlines. This is especially true in construction projects. Deadlines for the subcontractor should be included in the contract.
- Insurance – Insurance coverage is a crucial element of a subcontractor agreement. The agreement should list the minimum insurance required under the contract to designate which party is responsible for what and who may carry the liability.
- Commercial General Liability – this type of insurance is typically required before performing a great deal of work. This type of insurance is required under most subcontracts. The insurance protects the contractor from any damage to property or injuries sustained while on the job. The coverage typically extends to the services or work performed by subcontractors.
- Workers’ Compensation – This type of insurance should be mentioned because of the risk of injury. This is mostly seen in construction contracts but may also cover the subcontractor’s employees. Commercial Auto insurance – If a contractor or subcontractor uses a personal or company vehicle to transport themselves or suppliers, the insurance is necessary. It may be required under the agreement depending on the job.
- Professional Liability – This type of insurance protects the parties against human error that occurred during a construction project.
- Dispute Resolution –The dispute resolution is an important element of the subcontractor agreement. It establishes which party is entitled to attorney’s fees if the dispute should escalate past the negation stage.
How to Customize your Construction Subcontractor Agreement
A subcontract agreement will vary based on the type of contrition project and the subcontractor’s specialty. Since each state has different laws, it is important to consult with an attorney to review the terms listed in your construction subcontractor agreement.
Electronic Signatures for your Construction Subcontractor Agreement
Electronic signatures are quick, easy, and legally binding. Construction subcontractors are not always local, so having the document ready to e-sign is the agreement. Time is really of the essence in the construction world. ApproveMe.com is prepared to help you boost your company’s productivity and bring in more business.
While you’re hard at work as a construction contractor, getting your business’s name out, there can be a challenge. Here are some essential resources that can help get your business noticed:
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CONSTRUCTION SUBCONTRACTOR AGREEMENT
THIS CONSTRUCTION SUBCONTRACTOR AGREEMENT (“Agreement”) is being made between ____________________ (“Subcontractor”) located at ______________________________________________________ and ____________________ (“Contractor”) located at _______________________________________________________ on this _____ day of ______, 20___.
In consideration of the matters described above, and of the mutual benefits and obligations set forth in this Subcontract, the parties agree as follows:
LABOR AND MATERIALS
Beginning on __________________, 20____, Subcontractor agrees to perform the work described on Annex “A” attached hereto (hereinafter referred to as the “Work”).
The Work shall be done in accordance with the plans and specifications which are incorporated in this Agreement by reference, and the Subcontractor shall furnish the materials and equipment described on Annex “B” attached hereto.
No alterations shall be made to the work described in the plans and specifications, except upon the written order of the Contractor or the Owner. The Contractor may, at any time, by written order, make changes in the plans and specifications, which changes shall be evidenced by “change orders” signed by the Contractor and accepted by the Subcontractor.
Contractor agrees to pay the Subcontractor _________________ for the Work and services performed under this Agreement.
Total Cost of Work and Labor
Amount Due on Signing
Amount Due on Competition
Final payment for Work performed under this Agreement shall be made within _______ days of competition. Payments must be made to the Subcontractor by credit card, money order, check, or any other approved method of payment accepted by the Subcontractor. Payments must be mailed to:
The Subcontractor shall substantially complete the Work to the satisfaction of the Contractor on or before ___________, ____20___. Time shall be of the essence in the Subcontractor’s performance of this Agreement.
In the event the Subcontractor is delayed in completing the Work by the act, neglect, delay, or default of the Contractor or of any other subcontractor employed by the Contractor, or for reasons beyond the control of the Subcontractor, then the time fixed for the completion of the Work shall be extended for a period equivalent to the time lost, provided that no extension shall be made unless written claim is made within five (5) days from such event. The extension of time hereinabove provided for shall be the Subcontractor’s exclusive remedy in the event of such a delay, no matter how or by whom caused.
In the event the Owner elects to cease or postpone the Project, the Contractor may terminate this Agreement by written notice to the Subcontractor. Such termination shall be effective in the manner specified in the notice and shall be without prejudice to any claims which the Contractor may have against the Subcontractor. On receipt of such notice, the Subcontractor, unless the notice directs otherwise, shall immediately discontinue work and the placing of orders for materials, facilities, and supplies in connection with the performance of the Work, and shall, if requested, make every reasonable effort to procure cancellation of existing orders and sub-subcontracts upon terms satisfactory to the Contractor, and shall therefore do only such work as may be necessary to preserve and protect work already in progress and to protect materials, plant, or equipment on the site or in transit thereto.
In the event that the Subcontractor shall correct the situation which has caused the notice of cancellation to be given by the Contractor as above provided for, within the period of fifteen (15) days from the date of receipt of such notice, the cause of cancellation shall be deemed waived, and this Agreement shall continue in effect in the same manner as though such cause of cancellation had not existed, the Contractor, however, reserving its right to damages for breach of any provision of this Agreement.
The Subcontractor hereby guaranties that the Work shall be free from any defects due to faulty materials or workmanship or any violation of this Agreement for _______ year(s) from the date of substantial completion.
The Subcontractor shall perform the Work in compliance with the terms and conditions of the Contract.
INDEMNITY & INSURANCE
The Subcontractor, before commencing the Work, shall be qualified under the workers’ compensation law of the state in which the Work is to be done and shall at all times comply with the provisions of such law.
The Subcontractor shall, at all times, indemnify and save harmless the Contractor from and against any and all claims and demands whatsoever, including costs, litigation expenses, counsel fees, and liabilities incurred in connection therewith, arising out of injury to, or death of, any person whatsoever or damage to property of any kind by whomsoever owned, caused in whole or in part by the acts or omissions of the Subcontractor, its sub-subcontractors, materialmen, or any other person directly or indirectly employed by them, or any of them, while engaged in the performance of this Agreement or any activity associated therewith or relative thereto, and shall further indemnify the Contractor against any such claims allegedly caused in part, whether or not it be the fact, by reason of negligent instructions or directions given or purportedly given by any of the owner’s representatives with respect to the performance of the project or any aspect thereof.
The Subcontractor shall at all times maintain such public liability, property damage, and workers’ compensation or employer’s liability insurance as will protect the Subcontractor from any and all of the foregoing risks and from any and all claims under such workers’ compensation laws.
The Contractor shall keep the Work, including all materials delivered on the premises, fully insured against fire and other risks included in standard extended coverage endorsement exclusive, however, of Subcontractor’s tools and equipment. In the event of loss or damage to which such insurance is applicable, the Subcontractor agrees to be and remain liable for the replacement to its original condition of such portion of the Subcontractor’s work as may be so damaged, which replacement shall be in accordance with the provisions of this Agreement and of the principal contract, and shall be at the sole cost and expense of the Subcontractor, provided that the Contractor shall be obligated to pay to the Subcontractor, on account of the cost of such replacement, such sum or sums as shall be paid to the Contractor for the fire insurance carried on account of such loss or damage to the Work performed by the Subcontractor.
The Subcontractor shall procure all permits necessary for carrying on the Work and shall comply with all regulations, directives, ordinances, and laws relating to the Work or the conduct thereof.
ASSIGNMENT AND SUBCONTRACTS
The Subcontractor shall not assign this Agreement, or any of the payments to become due hereunder, nor shall the Subcontractor sublet any part of the Work, except with the written consent of the Contractor and approval of the Owner.
The laws of the State of ___________________ shall govern as to the interpretation, validity, and effect of this Agreement.
Parties to this Agreement shall first attempt to settle any dispute through a good-faith negotiation. If the dispute cannot be settled between the parties via negotiation, either party may initiate mediation or binding arbitration in the State of ________________.
If the parties do not wish to mediate or arbitrate the dispute and litigation is necessary, this Agreement will be interpreted based on the laws of the State of _________________, without regard to the conflict of law provisions of such state. The Parties agree the dispute will be resolved in a court of competent jurisdiction in the State of ______________________.
The prevailing party to the dispute will be able to recover its attorney’s fees and other reasonable costs for a dispute resolved by litigation or binding arbitration.
All notices or requests required or contemplated by this Agreement must be sent via email with a read receipt, or by U.S. Certified Mail with a return receipt. Notices must be sent to:
Name: _______________________________ Name: _______________________________
Address: _____________________________ Address: _____________________________
Email Address: _________________________ Email Address: _________________________
This Agreement constitutes the sole and entire agreement of the Parties regarding the subject matter contained herein, and supersedes all prior and contemporaneous understandings, agreements, representations, and warranties, both written and oral, regarding such subject matter. This Agreement may only be amended, modified, or supplemented by an agreement in writing signed by each Party hereto.
If any term or provision of this Agreement is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction.
This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile. email, or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
This Agreement and related documents entered into in connection with this Agreement are signed when a party’s signature is delivered electronically, and these signatures must be treated in all respects as having the same force and effect as original signatures.
No waiver by any Party of any of the provisions hereof shall be effective unless explicitly set out in writing and signed by the Party so waiving. No waiver by any Party shall operate or be construed as a waiver in respect of any failure, breach, or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power, or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power, or privilege.
This Agreement cannot be changed, modified, terminated, canceled, rescinded, or in any other way altered or negated unless the same is in writing and signed by the party against whom enforcement of the change, modification, discharge, termination, cancellation, or rescission is sought.
It is agreed that all understandings and agreements heretofore had between the parties are merged in this Agreement, which alone fully and completely expresses their understanding, and this Agreement has been entered into after full investigation and consideration, neither party relying upon any statement or representation, not embodied in this Agreement, which may be claimed to have been made by any of the parties hereto.
IN WITNESS WHEREOF, the Subcontractor and the Contractor have executed this Agreement the day and year first above written.
Contractor’s Signature Subcontractor’s Signature
Contractor’s Printed Name Subcontractor’s Printed Name
Contractor’s Contact Information: Subcontractor’s Contact Information:
Address: ______________________________ Address: ______________________________
Phone Number: _________________________ Phone Number: _________________________
Email Address: _________________________ Email Address: _________________________
SERVICES SPECIFICATION SHEET
WORK & LABOR
The Subcontractor agrees to provide the following services:
Contractor’s Initials _________ Subcontractor’s Initials _________
MATERIALS SPECIFICATION SHEET
The Subcontractor agrees to provide the following materials and equipment:
Contractor’s Initials _________ Subcontractor’s Initials _________
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Frequently Asked Questions and Resources
What is a contract?
Contracts are defined as written or spoken agreements which are enforceable by law. They can cover any topic or industry, whether sales, tenancy, employment, or otherwise (source).
What are the different types of contracts?
There are many different types of contracts, as defined by upcounsell, those for fixed prices, employment, lump sums, time and materials, unilateral or bilateral contracts, simple contracts and more. Each has its own specific terms, and can either be oral or written and some are non-negotiable (like adhesion contracts) while others have room to be adjusted or amended.
What makes a contract different from an estimate, quote, bid, or proposal?
Mainly contracts are set and finite and legally binding, whereas estimates, quotes, bids, and proposals are possibilities which can be accepted, rejected, negotiated, or ignored altogether. The key difference is that often a bid or proposal will contain terms and conditions that can be signed by the requestor and turned into a contract (source).
What should I include in my contract?
Every contract is comprised of no less than two core components: clearly outlined terms and signed agreement between two separate parties. For more information, read our 12 clauses you should include in every contract.
How should I write an effective business contract?
Contract creation can be challenging, in most cases getting legal counsel is advised to ensure it will be legally enforceable should you require that. Essentially you need basic terms which should be abided by, and an agreement on what product or service is to be provided, to whom, by whom, and what will be tendered with specific terms (such as deadlines, or how the delivery will be completed). For more tips, read our beginners guide to contract writing.
What is the difference between a contract and an agreement?
An agreement is any understanding or arrangement reached between two or more parties. A contract is a specific type of agreement that, by its terms and elements, is legally binding and enforceable in a court of law, according to Diffen.com.